Doha Bank (Q.S.C) : Why GCC is an oppurtunity for global investments?
04/23/2012| 03:39am US/Eastern
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GCC nominal GDP is expected to grow by 4% in 2012. GCC
Economic growth will be mainly driven by Qatar, Saudi Arabia
and UAE in 2012. The 9th 5 year development plan of Saudi
Arabia between 2009-14 gives emphasis to education, Social
and Health, Economic Resources, Transportation and
Communication, Municipal and Housing Services. The 8th 5 year
Plan of Oman between 2011-15 gives emphasis on
infrastructure. The recent fiscal policies of Oman also focus
on education, health and civil development expenditure. Dubai
is introducing a master plan for urban development that is
expected to open up about 950,000 jobs by 2020. In Qatar the
aggregate GDP growth in 2012-2016 is expected to average to
6.9% with Hydrocarbon GDP growth expected to be 4.4% and Non-
Hydrocarbon GDP to be at 9.1%.Services will be one of the
major drivers of the economy. Qatar's investment pattern will
reflect the decline in hydrocarbon capital spending In Qatar
between 2011-2016 the total gross domestic investment is
expected to be about QR820 Billion out of which the Private
hydrocarbon sector is QR 84bn and Private non-hydrocarbon
sector is QR 389bn.Gross investment is expected to average
25% of GDP over 2011-16. The ratio of non-hydrocarbon private
investment to total GDP could reach 15% by 2016, nearly
double it share in 2009.
The positive growth in the GCC region is going to invite
investments from Overseas. Huge project developments in GCC
require massive funds from overseas investors. Projects
prevail in Qatar non-hydrocarbon sector mainly in real estate
and infrastructure. In Saudi the major projects in
non-hydrocarbon sector include King Abdullah Economic City
and Jizan Economic City. Major projects in UAE are witnessed
in Jebel Ali area. Major projects in Oman include Duqm New
town and Deep water Gas line worth $24bn. In Kuwait the major
projects include "City of Silk".
In Qatar the Corporate tax for Non - Qatari Companies is
currently 10% unlike earlier it was on variable slabs upto 35
percent. Many initiatives are brought by Qatar Exchange in
recent years. In 2010 Universal trading platform launched by
Qatar Exchange (QE) improve order system and attract diverse
investor base, puts Qatar Exchange in par with major global
exchanges .In 2011, Qatar Exchange was connected by Secure
Financial Transaction Infrastructure, a worldwide network
that connects banks and brokers across the world to exchanges
in Europe and the US. W.e.f Feb 2011 Qatar Exchange trading
hours has been increased to three and a half hours , which
helps both international and regional investors. The 2011
Global Competitiveness Index report from World Economic Forum
has placed Qatar at 14th position out a total of 142 nations
covered .The P/E and P/B of Qatar exchange is currently 8.92
and 1.7 respectively and it appears attractive when compared
to other Global exchanges The tax incentives, initiatives
from Qatar exchange, competitiveness of Qatar economy and the
attractive price earnings will encourage global investors to
consider Qatar. Recently many Qatari banks namely QNB, Doha
Bank and CBQ have tapped the global market with bond issues
and thereby provided opportunity for global investors. The
renewable energy segment particularly the solar and wind
energy also provide opportunity for global investors in the
GCC region.
We have seen major investments made by GCC Soverign wealth
funds globally. In 2010 Kuwait Investment Authority had
invested 800m in Agricultural Bank of China. In April 2010
Abu Dhabi lands 15% stake in Gatwick for £125m.In 2010
Petrovietnam Insurance has allowed Oman Investment fund to
acquire a 12.6% equity stake for US$42.1 million. Qatar
Soverign funds have also invested globally. In June 2010
Qatar Investment Authority (QIA) invested $2.8bn in the
initial public offering of the Agricultural Bank of China.
Qatar Diar agreed to take a 5 per cent stake in Veolia
Environment. In April 2010 it bought a 40 per cent stake in
hotel chain Fairmont Raffles from Kingdom Holding in a deal
valued at $847 million. Qatari Diar, which counts
London's Chelsea Barracks among its most high-profile
overseas assets, has more than 80 projects worldwide worth
about $60 billion.
Qatar Investment Authority investment arm has stakes in
British supermarket chain J Sainsbury, Barclays Bank, the
London Stock Exchange and Credit Suisse. Qatari Diar bought
Harrods for a reported $2.3 billion. In August 2009 Qatari
government acquired 10 percent equity in Porsche. In Dec 2009
Qatar investment acquired 17 percent in Volks Wagen.Qatar
backed Paramount Services Holding Ltd injected 500mn Euros
through convertible bond into the merger of Greece's Euro
bank and Alpha Bank in 2011.In March 2011 Qatar has indicated
it would invest 300m Euros in Spanish banks. Qatar also plans
to invest $4 billion Euros in Spain. In March 2012 Qatar has
indicated plans to invest 100 million Euros in Bulgaria in
the sectors of agriculture, tourism and infrastructure. In
Oct 2011 Qatar holdings made investment of $1billion dollars
in European Gold fields. These trends indicated that GCC
region will be an opportunity for global investments.
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