Doha, Qatar – Qatar is gearing up for a FIFA World Cup equity market boom as the country’s stock market is all set to benefit from the upcoming big event.
With more than $4 billion in foreign inflows in just the first 10 months of this year, equity market experts say Qatar’s stock market, like most past World Cup host markets, has outperformed its peers in the mega-race and is expected to. to continue on similar lines in the year after the tournament.
Historically, the MSCI country stock market average of the host countries of the previous seven World Cups, excluding Brazil, has increased by 21.8 percent in the year leading up to the World Cup and by 13.4 percent in the year after. was, according to MSCI World. The index averaged growth of 4.3 percent and 9.5 percent, respectively.
The MSCI Brazil index fell by 34 percent in 2014. This decline was due to domestic economic conditions, a political crisis and high inflation prevailing at the time, analysts say.
However, 2022 is proving to be an exceptional year as stock markets weigh on interest rate hikes by central banks as they try to fight inflation and cut back on easy money lending that began during the pandemic. . The Qatar Stock Exchange was not spared from this.
The QSE index, which measures the 20 largest and most volatile stocks on the Qatar Stock Exchange (QSE), rose 24.7 percent from the start of 2022 to April 11, 2022, but then was almost flat at the end of June. almost almost, almost, almost, almost, almost, almost. on September 5, 2022, it increased again by 12.1 percent.
While that may not seem like much, it still puts the QSE Index as a strong performer among most major regional and global markets over the first eight months of this year, according to the latest available data. eyes
Akber Khan, senior director of asset management at Al Rayan-based, said: “As the country has been preparing for the World Cup for more than a decade, focusing on short-term stock performance would not be right.” Circle.
“If we look at the performance of the Qatar stock market in the last five years, when preparations related to the World Cup accelerated in terms of work speed, the Qatar stock market increased by 50 percent,” Khan noted.
He noted that during that period, the broad index of emerging markets equity declines by 20 percent, while global equity indices increase by 15 to 18 percent.
‘Show an advanced queue’
Since 2010, when Qatar won the right to host the World Cup, the state has spent more than $300 billion to modernize its infrastructure, including the Doha Metro, thousands of kilometers of local roads and highways, a new port, an airport new, and even a new city, as well as strengthening its oil and gas facilities.
The gains from the World Cup on the QSE are expected to continue next year, primarily from spending on construction, real estate, tourism, and shopping that flows through to corporates and the broader economy as a whole.
Saugata Sarkar, head of research at QNB Financial Services, said: “In particular, Qatar aims to use the event as a springboard to showcase its offerings, and hopefully increase international tourist arrivals to 2.1 million in 2019. 6 million annually by 2030.”
Qatari products are already in an investment sweet spot benefiting from incredible tailwinds. Adding to high oil and gas prices, significant net foreign investment inflows due to Qatar’s status as a safe haven, and hosting the upcoming World Cup, the country has also begun expanding its liquefied natural gas (LNG) facilities. which will almost double its gas. products, pushing it into the pole position as a leading manufacturer.
“We believe these drivers can significantly price the market, but the QSE Index should provide high-quality catalysts that help grow or stabilize the market despite the general global risk backlash,” Sarkar said.
“Although we cannot rule out temporary volatility in the market, we continue to remain long on Qatar’s stock markets due to their defensive characteristics supported by their strong fundamentals. Net-net, we expect strong results from Qatari companies in 2022 largely driven by the FIFA World Cup,” he added.
He warned that the villain will be the war in Ukraine, which will leave the Qatari and global scales.
However, what works in Qatar’s favor as the world grapples with the possibility of a recession is the fact that the country’s economic growth depends on gas production.
Director Mohsin Mujtaba said that due to the new demand from Europe due to the war in Ukraine and because Qatar is the “least” producer, “it is better to prepare for the negative impact of the recession on energy prices.” product and development, QSE. It will also be attractive to foreign investors as they look to rebalance their portfolios ahead of a global slowdown, he added.
Long term effect
According to local justice experts, the projects launched by the Qatari government to host FIFA 2022 will have a long-term impact on listed companies across various sectors.
BDSwiss MENA CEO Daniel Takieddine said in an email that, although the hundreds of thousands of visitors who will come for the month-long soccer tournament will have an immediate impact, “longer-lasting effects on the economy and financial markets in the country can be recorded. The event which is widely followed can attract individuals and companies to Qatar as a tourism destination and as an investment destination that increases capital gains.”
Oliver Kent, managing director at Dubai-ZK Sports & Entertainment, said he sees the World Cup as “just the beginning of a series of major events that will attract visitors in large numbers, strengthening the tourism sector in the long term”. “, referring to a Formula 1 race and the 2023 Asian Cup that the country will host next year.
Qatar 2022 CEO Nasser al-Khater expects the FIFA World Cup to contribute $17 billion to the Qatari economy during the event, down from an initial estimate of $20 billion.
While the main beneficiaries will be the hospitality industry, including hotels, malls, shops and stores, Al Rayan Investment’s Khan said several listed small and medium-sized companies that have won government contracts in the past few years are suppliers to large companies. will benefit in the same way. He said that they include firms that provide paving stones and construction materials, as well as apartment rentals and security services, among others.