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Qatar may draw $2bn if bourse upgraded

Doha, May 5, 2011

Qatar would see at least $2 billion in new foreign investment should it be upgraded from frontier market to emerging market status by MSCI in June, a BNY Mellon vice president said.

"Reports we've seen indicate Qatar would benefit from at least $2 billion in new money from investors who track the MSCI index," said Dubai-based Peter Gotke.

"You'd expect these indices to attach themselves very quickly, with a significant amount of money coming in a very short timeframe, possibly within six months or even three months," Gotke said.

"And with PE ratios in Qatar relatively lower than in other parts of the region, $2 billion itself could be a very conservative number."    

Though Qatar and the UAE have been rebuffed twice by MSCI for failing to raise foreign ownership limits and switch to a new settlement system, Gotke said he believes both have made significant advances toward that goal.

"Certainly Qatar, and to a certain extent UAE, have made really good progress. The DvP (clearing system) is in place. It's been pushed back a bit in UAE, which may or may not have consequences," Gotke told reporters on the sidelines of an event in the Qatari capital Doha.

"On the foreign ownership side, there are companies here in Qatar that have managed to get permission to ramp up to 49 percent. That is indicative I think of a flexible situation."    

"If the apparatus is that flexible, hopefully it'll resonate with MSCI, but whether it will resonate enough I cannot say."    

Though many see low volumes and regional unrest dampening prospects for the two Gulf states, Qatar, if upgraded, would move on the radar of an estimated $5-$6 trillion in assets under management by institutions that track MSCI indices, he said.

With a soaring economy and gross domestic product expected to grow 18 percent this year, Qatar's outlook is already among the world's brightest.   

"The appetite for Qatar is amazing. We're always asking investors where they want to invest. Qatar in the last year or so has been in the top three. It's a real area of interest," Gotke said.   

"One of the knock-on effects of an upgrade would include more IPOs, more companies looking to grow not just locally, but by attracting foreign investors.

"Qatar has been very active as a sovereign in London. There's clearly a desire at the sovereign level, and that quickly washes down to the corporates here to build portfolios overseas."  - Reuters

Tags: Qatar | investment | bourse | upgrade | MSCI index |

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