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Mon 30 May 2011 04:31 PM

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Qatar's shares plummet on FIFA probe

Suspension of Qatar's Bin Hammam on bribery charges sends Gulf state's shares into freefall

Qatar's shares plummet on FIFA probe
FIFAs decision to suspend bin Hammam over alleged bribery has trimmed investor appetite
Qatar's shares plummet on FIFA probe
Mohammed Bin Hammam has been suspended from all FIFA related activities. (Getty Images)
Qatar's shares plummet on FIFA probe
A sign on the FIFA headquarters is seen on late November 30, 2010 in Zurich. (Getty Images)

Qatari shares dropped for a second day after soccer’s governing body suspended Mohamed Bin Hammam pending an investigation into bribery allegations, trimming appetite for assets of the 2022 World Cup host.

Commercial Bank of Qatar, the nation’s second-largest bank by assets, decreased 1.1 percent. Barwa Real Estate Co, the Qatar-based property developer, fell to the lowest level since March. The QE Index retreated 0.2 percent to 8,354.61 at the 1:15 pm close in Doha, the lowest since May 25.

“The FIFA news flow is a sentiment dampener,” said Sachin Mohindra, a fund manager at Abu Dhabi-based Invest AD. “Uncertainty over progress on revising foreign ownership limits is also encouraging a cautious stance with investors” as the country seeks an upgrade to emerging market status at MSCI Inc. later this month, he said.

The Gulf country may be reclassified from frontier market status at MSCI on June 21. Foreign-ownership limits on stocks and “efficiency” are some issues that both Qatar and the UAE face, Manuel Rensink, head of Middle East and North Africa at MSCI, said May 3.

Qatar’s Bin Hammam, who’s responsible for the sport in Asia, and the North and Central American soccer head Jack Warner were suspended amid an investigation into allegations that they paid bribes to solicit votes for FIFA’s presidency.

The organisation had already been trying to fend off allegations of improper conduct by its decision-making body during the bidding process for the 2018 and 2022 World Cups.

FIFA, which has 208 member nations, controls the management of the world’s most lucrative sport, and rakes in $4bn from every hosting of the World Cup, which is held every four years.

Bin Hammam was seen as central to Qatar’s successful bid to hold the 2022 World Cup in the Gulf state. FIFA president Sepp Blatter has since refused to rule out that vote being re-run. If FIFA opts to resubmit the vote on the 2022 World Cup, it will be the first time in the organisation’s 107-year history that such an event will have taken place.

Australia, one of the bidding nations beaten by Qatar in December’s vote, said last week it may rebid to host the games if the vote is re-run.

Australian lawmaker Nick Xenophon said Monday FIFA should “refund” the A$45.6m ($48.8m) the country spent on its bid in the wake of the corruption scandal.

Despite a decline in investor sentiment, Invest AD’s Mohindra said Qatar’s rapid growth story remained on track.

“Nothing has changed at the fundamental level,” he said.

Qatar’s economy is forecast to grow 20 percent this year, the world’s fastest, from 16.3 percent in 2010, the Washington- based IMF said in its Regional Economic Outlook report in April.

The government forecasts a budget surplus of QR22.3bn ($6.1bn) in the 2011-2012 fiscal year, the Qatar News Agency said March 31.

The country will invest about $88bn in infrastructure for the World Cup, Qatar National Bank SAQ’s Assistant General Manager Enrico Grino, who oversees project finance, said May 16.

Crude for
July delivery declined as much as 1 percent to $99.60 a barrel in
electronic trading on the New York Mercantile Exchange. The six nations
of the Gulf Cooperation Council, including Qatar and the U.A.E., supply
about a fifth of the world’s oil.

Dubai’s benchmark index declined 0.6 percent and Bahrain’s BB All Share Index lost 0.3 percent. Saudi Arabia’s Tadawul
All Share Index fell 0.3 percent. Abu Dhabi’s measure increased 0.5
percent, Kuwait’s SE Price Index rose 0.3 percent and Oman’s gauge
advanced 0.2 percent.

*With agencies


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