Qatar: Not Yet an Investor’s Dream

Still, this Gulf state should remain on your 'watch' list

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Qatar: Not Yet an Investor’s Dream

But even if Qatar misses the cut this time, the fact is the country’s growing economic prowess will ensure that it will continue to receive expanding attention from investors all over the world. And it most likely will achieve emerging market status sooner rather than later, which will boost its attractiveness in the minds of investors.

The country also is sure to attract additional foreign investment via its winning bid to host the 2022 World Cup. That is expected to instigate a building boom, as large-scale infrastructure projects — including a metro system and the Qatar-Bahrain causeway — get under way.

But investors do need to be aware that while Qatar is a Gulf state and is not generally thought of in the same “Mideast crisis” terms as Egypt, Syria and other Arab states, it still is not a democracy, and uprisings in the area could possibly affect Qatar, too — especially economically.

Although highly speculative because of location as well as the small size and young age of Qatar’s stock market, I have found three exchange-traded funds that offer investors with a high-risk tolerance an opportunity to participate in Qatar’s growth. Their primary investments are in the large-cap financial services, communication and industrial sectors.

  • WisdomTree Middle East Dividend Fund (NASDAQ:GULF), rated 1 star by Morningstar
  • Market Vectors Gulf States (ETF) (NYSE:MES), rated 1 star by Morningstar
  • PowerShares MENA Frontier Countries (ETF) (NASDAQ:PMNA), rated 1 star by Morningstar

Each ETF came to market in 2009, so statistics are thin. In 2010, their returns were 22.44%, 23.81% and 8.16%, respectively. But year-to-date 2011, each of the ETFs are in losing positions, with PMNA the worst, at -19.52%, followed by MES (-11.59%) and GULF (-6.65%).

I think it is early to make a bet on Qatar, thanks to its limited investment alternatives and the political risk that has permeated the Arab states in recent months, but risk-tolerant investors should keep the country on their “watch” lists, as emerging markets will be the place to reap fabulous returns once the global recovery conquers a few more speed bumps.

As of this writing, Nancy Zambell did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/2011/12/qatar-economy-investing-emerging-market-middle-east/.

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