LONDON: The managers of a fund investing in Qatari companies insist it is safe from a falling oil price, shaky world economy and Middle Eastern political unrest as it moves from a London AIM listing to the main market.
David von Simson, chairman of the Qatar Investment Fund, said recent pressure on the Qatari market in response to Arab revolutions made little impact on the robust gains seen through the second half of last year.
The fund’s shares increased by about 30 percent in the last two quarters of 2010 and are little changed since the start of 2011 despite a volatile first three months of the year.
Indeed, with a per-capita GDP of $76,000, according to the International Monetary Fund, Qatar is one of the richest countries in the world, making popular uprisings less likely than in more languid economies such as Egypt.
"There’s not really any sense on our part that political events elsewhere in the region really have a relevance to us," he said.
Neither does he worry about the impact that sharp corrections in natural resource prices might have on the oil and gas-heavy Qatari economy.
The Qatari government budgets on the basis of an oil price at around $55, he said, so it would have to fall a lot further from current levels, still above $100 even after the recent bouts of selling.
"There is no concern on our part that the … bubble that has slightly burst in commodities has any real impact," von Simson said.
The Qatari economy is expected to grow at a rate of around 7 percent per year up to 2016, according to Panmure Gordon analysts, buoyed by large public works projects such as a new port.
Qatar is also due to host the football World Cup in 2022, an event that will involve considerable spending on infrastructure.
The fund’s biggest exposure is to the Qatari banking sector, Von Simson said, with Qatar National Bank the largest holding making up about 14 percent of net asset value.
"We are certainly not a tracker fund but the investment adviser likes to not deviate too far from the market. And the market has got quite a heavy banking component," Von Simson said.
Next is petrochemicals group Industries Qatar, making up 13.6 percent of net asset value, he said.
Qatar Investment Fund launched in 2007 under the name Epicure Qatar Equity Opportunities, raising $171 million in its listing on London’s AIM market.
It currently has a market capitalization of about $213 million, according to Thomson Reuters data, and its shares started trading on the main board of the London Stock Exchange on Friday.
This, von Simson notes, opens it up to a wider audience and could lead to more retail investors taking a stake.
The fund is mostly owned by institutional investors, the largest of which is City of London Investment Management, with 29 percent of the shares.
The next largest is Qatar Insurance Company with 16 percent, followed by the local sovereign wealth fund Qatar Investment Authority with 11 percent, a source close to the fund said.
Von Simson said there are no plans, at least in the immediate term, to raise more capital by issuing shares.
"We’re already in terms of the region a reasonably sized fund … We’ll follow the situation," he said.
