DOHA: The London-listed Gulf Investment Fund (GIF), formerly known as Qatar Investment Fund (QIF), has retained its position ‘overweight’ on Qatar.
On October 16, 2017 the fund announced its intention to change its investment policy from a largely Qatar-focused investment strategy to a broader GCC investment strategy. Previously, the investment policy enabled the fund to invest up to 15 percent of the company in GCC countries, other than Qatar.
The change in investment policy removed the 15 percent limit and enabled the Company to increase its investment allocation to other GCC countries and provided the Investment Adviser with a wider investment universe and more flexibility to identify attractive opportunities in the GCC region.
However, the GIF’s 2017 interim report showed its allocation to Qatar stood at 85 percent as at December 31, 2017. “We expect to retain a significant overweight position in Qatar over the short term while Qatar is trading at an attractive valuation compared to other GCC markets.
“We are monitoring developments in other GCC countries and will be increasing exposure to other GCC countries as we identify attractive investment opportunities,” GIF said.
Looking ahead, the GIF believes that GCC markets are an attractive long-term investment opportunity. Governments in the GCC are expanding their non-oil sectors with infrastructure development and investment in the social sectors.
On the future regional investment themes, it noted the GCC banking sector tends to enjoy strong asset quality and capitalisation, along with government support and growth from infrastructure investments.
Rising population and an undersupplied residential market in most of the GCC countries is expected to create robust demand for residential construction and housing finance.
Shortage of medical services and education will continue to create a need for government spending on social development and these sectors have seen high allocations in recent government budgets.
Tourism should drive demand for hospitality, travel and infrastructure sectors and create employment. Rising population, high spending power and increasing tourism should create opportunities for retail businesses.
The petrochemical sector contributed c.30 per cent to GDP in 2014 making it a key non-oil GCC export sector. The world petrochemical market is poised to grow at 8.8 per cent annually until 2022.
On Qatar’s positive sentiments, the GIF noted India looks to boost Qatar LNG import volume. India’s LNG imports are expected to rise by 10 per cent, to over 30 million metric ton per annum (MTPA) by 2020, versus 19 million MTPA in 2016. India is Qatar’s third largest export destination.
Currently, the Qatar-India trade is around $10-$10.5bn, of which $9-$9.5bn is the value of Qatar’s exports to India, mostly LNG and petrochemicals.
RasGas sealed a 15-year LNG Sales and Purchase Agreement (SPA) with Bangladesh Oil, Gas and Mineral Corporation (Petrobangla). RasGas will supply 2.5 million MTPA of LNG to Petrobangla for 15 years.
Qatargas signed a medium-term SPA with Turkey’s Botas to deliver 1.5 MTPA of LNG for three years. Qatargas also signed a SPA with Shell to deliver up to 1.1 MTPA of LNG for five years.
This deal provides Qatargas with access to Shell’s gas sales portfolio in the United Kingdom and continental Europe, as well as the flexibility to manage LNG deliveries to its global client portfolio.
Besides, Hamad Port is eyeing a 35 per cent of region’s trade in 2 years. The $7.4bn Hamad Port, covering 30,000 square kilometres, has already won 27 per cent of the regional trade in the Middle East since opening in December 2015. Part of the port’s strategy is to gain 35 per cent of the total regional trade in 2018 thanks to its strategic location and superior facilities.
The private sector will have a major portion of the construction work of the second phase, with projects worth QR5bn to be completed and delivered between 2020 and 2021.
