As Qatar continues to combat COVID-19 pandemic and tries to reopen its economy without fuelling resurgence in coronavirus, top market experts are 'cautiously optimistic' on Qatari stock market. A long-term investor has numerous opportunities across a number of sectors, they said yesterday.
Participating in a Webinar organised by Qatar Stock Exchange (QSE) on “COVID-19, Oil and Outlook on Qatari Stocks” the expert panel noted that the global economy has started to resume activities and there is ‘nothing much to worry' for long-term investors.
The panellists included Sheikh Hamad bin Mohammed Al Thani, Senior Vice President, Investment & Treasury, Qatar Insurance Company; Akber Khan, Senior Director, Al Rayan Investment; and Bassam Slim, Portfolio Manager, Aventicum. Mohsin Mujtaba, Director, Product and Market Development, QSE, was the moderator.
Sheikh Hamad said the recent plunge in oil prices was due to the storage fears. Oil prices are expected to be stabilised at $50-$70 range in long-term. “The current stress in the market is a 6-12 month game,” he said.
On Qatari economy, he stressed the need for a ‘balanced budget’, instead of going for a deep cut in spending. A severe budget cut will potentially have negative impact, he added.
Commenting on Qatar's stock market outlook, Sheikh Hamad said there is nothing to worry for long-term investors. Currently, there are lot of uncertainties about where the market is really heading to. Even the well-capitalised global companies with good business models are facing crisis. “We need to get the second quarter data to understand where the market is really going . But i don’t think long-term investors need to worry a lot,” he said.
“The second quarter and third quarter results will tell you more about the dividends. It’s very complicated market at the moment,” he said.
Akber Khan of Al Rayan Investment said : " While uncertainty defines the coming months, the longer term investment case for Qatar is more promising. Assuming the FIFA World Cup 2022 runs as scheduled, in less than two years, the country should begin to benefit from a surge in the population that should last at least a year.....Later on in the decade, a 60 percent jump in LNG output will materially boost the State's income. a long term investor has numerous opportunities across a number of sectors"
Akber noted COVID-19 has caused operational disruption for most businesses in Qatar; some have been mildly impacted, while others have seen all revenues disappear due to lock-down measures. While petrochemical producers have not been hit operationally, demand for many of their products has collapsed leading prices to plunge. On the stock market outlook, he said it depends on the pace major economies re-open and then speed with which activity is restored. "its likely to be a very challenging period."
Highlighting the resilience of of Qatari economy, Akber said over the last five years, Qatar has had to face enormous crises: the 2014-15 collapse of oil to $30, the 2017 blockade by the Gulf neighbours and now the disastrous combination of global pandemic and $20-$30 oil. At the time of the blockade, overnight, Qatar was forced to re-create supply chain and multi-sourcing became the norm. "This has meant authorities have had one less headache in 2020 as the nation has remained fully supplied despite global dislocations. the same cannot be said for many major economies."
Aventicum’s Bassam Slim said he would take a cautious approach to Qatari stocks. “ I am cautiously optimistic on Qatari equities. Now, we have the lock-down and got the numbers. We are heading to a phased reopening. But we can’t predict anything in the event of a second wave of pandemic.... and we don’t know what exactly is going to happen to the local companies. Different companies in the same sector are behaving in a different ways,” Bassam added.
