DOHA: Qatar continues to remain investors’ preferred markets of in the GCC.
Strong growth prospects driven by an expansionary budget are underscored by attractive valuations and healthy corporate earnings growth, Qatar Investment Fund (QIF) noted in its 1Q2014 investment report yesterday.
The Investment Adviser remains positive and overweight on the Qatari banking sector, with a sector weighting, including financial services, of 49.1 percent of net asset value (NAV) at the end of Q1, 2014 against 45.8 percent in Q4, 2013.
Qatar’s banking sector enjoyed strong growth in 2013, with banking assets growing 11.6 percent to QR915.9bn compared to QR820.5bn at the end of 2012. The growth was mainly driven by a 13.3 percent rise in loans.
The growth prospects for Qatari banks remain good given strong lending growth domestically and as Qatari banks seek opportunities outside of Qatar.
GCC markets continued their strong performance with all posting gains in the first quarter of 2014. Dubai was the strongest performer (+32.1 percent). Oman and Kuwait were flat (+0.3 percent each).
Qatar’s 12.1 percent gain included performances from insurance (+20.5 percent), industrials (+17.9 percent) and banking and financial services (+16.9 percent) sectors. The Qatar market enjoyed net foreign investment flows of $532.4m in January 2014, followed by $188.1m in February 2014 and $96.0m in March 2014.
The profitability of Qatari companies remained strong in 2013. Net profits increased 11.1 percent compared to 2012, to QR42bn. In Q4, 2013 corporate profits rose 24.2 percent. This growth was largely driven by the insurance and real estate sectors.
Qatar’s banking and financial services sector profits increased 6.6 percent in 2013. The banking sector was the main contributor with profits up 7.5 percent in the year with increased lending particularly to the private sector (+16.8 percent in 2013). Going forward, public sector loan growth is expected to remain healthy driven by Qatar’s infrastructure investment programme.
The Dubai market continued its strong 2013 performance, with banks, investment and financial services and real estate and construction sectors registering double digit growth in Q1, 2014. Saudi Arabia reported an 11 percent growth during the quarter, helped by gains in retail and real estate development. Bahrain gained 8.7 percent in the quarter. “The GCC markets can continue this performance in the near term, driven by the upgrade of Qatar and UAE to emerging market status by MSCI and S&P Dow Jones, continuing momentum in Dubai from winning the right to host the World Expo in 2020...”
Launched to capitalise on the investment opportunities in Qatar and the GCC, the QIF invests in quoted Qatari equities listed on Qatar exchange in addition to companies soon to be listed, with a possible allocation of up to 15 percent in other listed companies elsewhere in the GCC.