03/01/2016 07:42 AST
Despite plunge in oil prices, Qatar has held up relatively well in the current rout in emerging market stocks. FTSE Global Market’s ‘emerging market’ analysis noted Qatar appears to be weathering the gathering storm in emerging market.
Although with the exception of the FTSE upgrade, there remains a lack of immediate catalyst for Qatari stocks, even so Qatar maintains its edge as the government continues to spend freely, even as energy prices remain depressed. Despite all depressed energy prices, Qatari is expected to post a limited low budget deficit in 2016, the Qatar country analysis noted.
Despite increase in vacancies, rents have remained strong during Q2 and Q3, 2015, primarily due to an increase in population. Population growth is expected to remain strong as infrastructure spending attracts expatriate workers. The population of Qatar touched 2.37m in May, up 9.2 percent year-on-year as job opportunities in non-hydrocarbon sectors such as finance, hotels, restaurants and trade and transport open up.
Citing Qatari official data, the report noted Qatar’s long term infrastructure spending will continue, driven by low gearing accumulated budget surpluses and Qatar having one of the lowest break even oil prices for its oil production in the region. Notwithstanding investment related to the FIFA World Cup, that Qatar’s GDP is expected to continue to grow by at least 5 percent over the mid-term, backed largely by government led spending in infrastructure. Qatar’s GDP increased 4.1 percent in Q1 2015 compared to Q12014, driven by non-hydrocarbon growth. Compared to Q4, 2014, GDP grew by 3.4 percent. In the first quarter the hydrocarbon sector contracted by0.1percent, compared to Q12014, while the non hydrocarbon sector increased by 8.9 percent because of an increase in construction, (up 11.4 percent), trading, hospitality and financial sector activity . The financial sector rose by 9.8 percent, while trade, hotels and restaurants sectors combined grew by 9.3 percent in the quarter., compared with the same quarter last year.
An increase in sovereign spending is in line with the rise in production of public goods and services to cater to Qatar’s growing population. In consequence, the government’s consumption expenditure (GFCE) looks to have grown by 10 percent year-on-year to QR29.7bn in the second quarter of this year. It also suggested a 1.5 percent rise against spending in Q1, 2015.
Nonetheless there remain stresses in Qatari market. Qatar’s gross national income (GNI) plunged 17.2 percent year-on-year to QR150.81bn in the second quarter (Q2) of this year. The country’s gross national savings declined 29.9 percent year-on-year to QR77.15bn and it was down 4,2 percent against Q1, 2015. The gross saving ratio to nominal GDP in Q2, 2015 has been estimated at 50.4 percent compared to 58.2 percent n the previous year period. The comparative figure for Q1, 2015 was 50.5 percent.
Last year was a particularly unique year for GCC economies due to decline of oil prices to unexpectedly low levels. Compared to this precipitous decline in oil price, Qatari stocks declined a mere 15 percent in 2015. Drilling down, bank stocks declined between 10-15 percent; chemicals and telecoms around 30 percnet, although for different reasons, and “utility” stocks like Nakilat and Qatar Electricity actually went up by around 5 percent and 15 percent respectively, a top market analyst told The Peninsula yesterday.
The Peninsula
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