Qatar growth story untouched by revolts that have toppled Arab rulers in Tunisia and Egypt
Qatar's near-zero unemployment rate will help shield the gas producer's economy from the spread of unrest in the Middle East and its banks will generate double-digit earnings growth, a London-listed fund says.
The International Monetary Fund expects Qatar's economy to grow by 20 percent, with an expected $100bn in infrastructure projects fuelling growth in the world's top liquefied natural gas exporter.
The unemployment rate stands at 0.5 percent, according to CIA data.
And the growth story is unaffected by revolts that have toppled Arab rulers in Tunisia and Egypt, which is spreading into other parts of the region, including its neighbour Bahrain, says David von Simson, chairman, Qatar Investment Fund (QIF).
Qatar's stock market showed attractive valuations, with the price to earnings ratio standing at 10.6 percent, below that of Kuwait, Saudi Arabia, Dubai and broader emerging markets, he added.
"We see it is a very cheap market to invest in. It's not a mad investment boom based on borrowed money," von Simson told a briefing.
"When we analyse, unemployment is clearly a key one. Some of the markets where you've seen problems in recent weeks were countries with 20 percent unemployment. That's a very different dynamic... This is why we have 99 percent invested in Qatar."
The country's sovereign wealth fund has invested 10 percent of the QIF, which is listed on AIM -- the London Stock Exchange's international market for smaller growing companies.
The QIF can invest up to 15 percent abroad but currently has almost all invested domestically. The fund has nearly 15 percent of its assets in Qatar National Bank and around 14 percent in Commercial Bank of Qatar.
QNB's earnings per share growth rate based on estimated 2011 earnings is 16.5 percent and Commercial Bank's is 25 percent.
The Gulf Arab state is expected to spend $100bn over the next five years on infrastructure projects including road and rail networks planned before it was chosen as host of the 2022 soccer World Cup, as well as air-conditioned stadiums.
"If oil prices drop (sharply) that's a risk. Ultimately this is an emerging market so there is a liquidity issue. It's a very concentrated play," said Sandeep Nanda, investor advisor to the fund and executive vice president of investments at Qatar Insurance Company.
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