Qatari Stocks Extend Rout to Three Days as World Cup Woes Mount

Qatar’s shares fell for a third day and bonds dropped on concern the Persian Gulf nation may lose the right to host the 2022 soccer World Cup, potentially jeopardizing some of its $200 billion investment plans.

The benchmark QE Index slid 0.6 percent to close at 13,142.69, the lowest since May 22. The yield on the benchmark 5.25 percent government bond due in January 2020 gained two basis points, or 0.02 of a percentage point, to 2.43 percent at 3:41 p.m. in Doha, data compiled by Bloomberg show.

Qatari stocks, among the world’s best performers this year, have lost 4.1 percent in the past three days after Britain’s Sunday Times reported that payments were made to soccer officials in return for allowing the Arab country to host the tournament. Rashid al Mansoori, chief executive officer of the Qatar Exchange, said in an interview today the nation won the bid with “credibility” and corruption allegations were “noise.”

“If countries are asking for a re-vote, this will hurt the market further,” Hisham Khairy, the Dubai-based head of institutional trade at Mena Corp. Financial Services LLC, said by e-mail today. “I would stay away at the moment and wait for things to settle.”

Transient Impact

The Middle East nation, which holds the world’s third-largest natural-gas reserves, plans to spend as much as $200 billion on projects including stadiums, roads and hotels in the run-up to the event. A panel studying the possibility of corruption in the bidding process said it will issue its findings in July.

Telecommunications stocks led the Qatar benchmark index lower. Ooredoo QSC declined 2.4 percent 150.30 riyals, the lowest since May 25, and Vodafone Qatar fell 1.6 percent to 20.55 riyals. Industries Qatar QSC, the country’s biggest listed petrochemicals company, slid 1.6 percent, the biggest drop in more than two weeks, to 183.60 riyals.

Arjuna Mahendran, chief investment officer at the wealth management division of Dubai-based bank Emirates NBD PJSC, which oversaw about $2.1 billion at the end of last year, said declines related to the World Cup may be short lived.

“Any impact with regards to stocks will be transient and will bounce back very fast,” Mahendran said by phone from Dubai today. “It’s a fast-growing economy and a resource-rich country, that’s what’s driving growth in the short term. The World Cup was icing on the cake but the World Cup won’t damage corporate earnings in a significant manner.”

The exchange is taking steps to “keep fuel in the market,” Al Mansoori said today in Dubai.

Qatar raised the foreign ownership limit for shares listed in Doha to 49 percent through a royal decree last week. The move may lead to additional inflows of $440 million and an increase in the country’s weighting on MSCI Inc’s emerging-market measure, Deutsche Bank AG said in a May 28 note.

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