• Qatar economy:
Despite the financial crisis and the ups and downs of the economy worldwide, Qatar economy has maintained its growth for the past several years and one of the main reasons for that is the country’s production of oil and gas (more than 60% of GDP) that made Qatar one of the world’s fastest growing and higher per capita income countries . As the diagram shows, Qatar GDP growth rate is the highest among the countries in 2010. To show the growth of the GDP, the second diagram shows the nominal GDP of Qatar and the real growth rate for the past 5 years. It was constantly increasing except for 2009due to the crisis, but the Qatari authorities protected the local banking sector through direct investments into domestic banks and what helped Qatar to rebound in 2010 is the increase of the prices of oil and gas .Growth forecasts for the economy vary, but most estimates put growth at 10% per annum at least for the next 5 years, with further growth of at least 7% per annum foreseen beyond that .
The economic policy of Qatar is to focus on non-associated natural gas reserves and also to increase the private and foreign investments in non-energy sector and Qatar wining the bid of world cup of 2022 will enforce and accelerate this goal by increasing the large-scale infrastructure like Qatar’s metro system and the Qatar-Bahrain causeway .
Qatar Central Bank (QCB) is responsible for Qatar’s monetary policies that determine the size and rate of growth of the money supply, which in turn affects interest rates. The monetary policies in Qatar are aimed to fixed parity between the Qatari riyal (QR) and the United States dollar (USD) at QR 3.64 per dollar . If the money supply grows too fast, the rate of inflation will increase and if the growth of the money supply is slowed too much, then economic growth may also slow. So, Qatar’s inflation rates during the past year reached an all-time high rate of 15.1% in 2008 compared to 13.8% in 2007 due to the increase prices of property and the depreciation of the US Dollar against world major currencies. Inflation slowed down sharply to -4.9% in 2009 due to the global financial and economic crisis. But now the inflation rate reached manageable rates of 1% and 3% in 2010 and 2011due to wise and timely government policies of fiscal and monetary management .
Qatar is politically stable compared to other countries in the Middle East and GCC countries and is maintaining a good political, economical, and social relations with the countries worldwide.
• Qatar Exchange (QE):
Qatar exchange officially started its operations on May26, 1997 with initially seventeen companies and an estimated market capitalization of around 6 billion Qatari riyals. Trading started manually, and then turned semi-electronic, and after the implementation of the electronic trading project it became fully electronic on March 11, 2002. At the beginning, only Qatari citizens were allowed to trade the stocks of companies listed on the stock exchange. However, a new law was passed recently allowing citizens of the Gulf countries to invest in the stocks of companies listed under industrial and service sectors for a maximum of 25%. The new law also allowed Non-Qataris in general to invest in the capital stock of newly established or privatized companies, such as Qatar Telecommunications Company and Al-Salam International Company. It is expected that the Qatari Government would issue a new law permitting non-Qataris to invest in the capital stock of all companies through investment funds . The market contains 4 main sectors that are shown on the diagram, and we will talk here also about the companies we chose in our portfolio:
Bank sector: The banking sector is the second largest sector with a market share of 27% of the total market. The main banks in this sector are Qatar National Bank, Qatar Islamic Bank, Commercial Bank of Qatar, Doha Bank, Al Ahli Bank QSC, Qatar International Islamic Bank, Masraf Al Rayan, and Al Khalij Commercial Bank.
Service sector: The Services sector is one of the fundamental dynamic sectors of Qatar economy. Trying hard to satisfy citizens and residents needs and requirements. Its main objective is to achieve their welfare. Since the country’s aim is to invest more in non-energy sector, we can see the huge portion of the service sector in Qatar’s market. This sector is considered to be one of the fast growing economic sectors in Qatar, and a good example of that is the telecommunication sector.
