Qatari Fund Says Banks Cheap Amid $138 Billion Spend BingeMahmoud Kassem
Qatar Investment Fund Plc, a London-listed fund specialized in the Persian Gulf nation, said the country’s banks are poised for gains, boosted by $138 billion in infrastructure spending before the soccer World Cup.
“Valuations are low and we’ve high earnings visibility,” Nicholas Wilson, the fund’s chairman, said by telephone. “We have a good idea on how much is going to be spent on the infrastructure and the improvement in demographics is going to drive consumer spending which will benefit the banks.”
Banks, which make up half the Qatar Investment Fund, have had a 23 percent annual compound growth over the past six years, Wilson said from London. Qatar National Bank SAQ, which bought Societe Generale SA’s majority stake in its Egyptian unit for $1.97 billion in December, makes up 22 percent of the index, according to the fund’s holding as of March 30, 2012.
The fund, with a market value of $170.4 million, will remain overweight on Qatari banks and is also betting on growth in industries such as aluminum, steel and fertilizers, he said. The shares have gained 4.4 percent this year.
“Access to low-cost energy sources is a distinct advantage in global markets,” Wilson said. “Asset management and insurance are also expected to make meaningful contributions.”
The government-run Qatar Financial Center Authority, charged with expanding the country’s financial services industry, plans to make Qatar a hub for asset management as well as reinsurance. Credit Suisse Group AG and Qatar Holding LLC, a unit of the Persian Gulf emirate’s sovereign-wealth fund, agreed last year to form asset manager Aventicum Capital Management to boost investments in emerging markets.
Qatari shares are among the cheapest in the Persian Gulf, trading at a multiple of 8.8 times earnings, compared to 9.7 in Saudi Arabia, according to Wilson. The country’s benchmark Qatar Exchange Index has gained 5 percent this year after declining 4.8 percent last year.
Qatar, the biggest exporter of liquefied natural gas, revised its 2012 nominal gross domestic product growth, which reflects the cost of oil, to 14.7 percent from 11.2 percent amid higher-than-forecast crude prices. The nation, which is hosting the 2022 soccer World Cup, plans to spend $138 billion on infrastructure from 2011 to 2016, the government has said.