IFN
IFNCOUNTRY
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CORRESPONDENTS
Qatar's upgrade
QATAR
By Amjad Hussein
As Qatar prepares for the MSCI
upgrade from ‘frontier market’ to
‘emerging market’ at the end of May
— with the S&P Dow Jones indices
preparing to do the same in September
of this year — there has been an
increased flow of foreign funds into the
Qatari economy, with the benefits of the
MSCI upgrade estimated to be as much
as US$2.6 billion. As expected, these
upgrades by the global equity index
compilers have helped improve the
perception in the international markets
of the Qatari investment climate.
The announcement of the MSCI upgrade
has definitely benefited the Qatari
financial sector with banks such as Qatar
Islamic Bank (QIB) and Commercial
Bank (CBQ) having obtained regulatory
approvals to raise their foreign
ownership limit in order to cater for
the anticipated increased interest from
foreign investors. It should therefore be
no surprise that the provisional list of
constituents of the new MSCI emerging
market index includes the major Qatari
financial institutions such as Masraf Al
Rayan (MAR), QIB, Qatar National Bank
(QNB), CBQ and Doha Bank, along with
the other jewels of the Qatari economy
such as the national utility company and
telecoms operator.
Recent reports estimate that Qatar’s
real GDP growth will accelerate to
6.8% in 2014 as the implementation of
large infrastructure projects and higher
population continue to drive double-digit
growth in the non-hydrocarbon sector.
The growth figures for the fourth quarter
of 2013 confirm the continued process
of economic diversification of Qatar’s
economy away from its traditional role
as a hydrocarbon exporter towards a
manufacturing and services economy.
Wholesale trade, hotels and restaurants
were the fastest growing sector (19.3%
year-on-year), predominantly on the back
of the increase in population. Financial,
real estate, and business services were
the second-fastest growing sector (18.1%
year-on-year) as banking intermediation
accelerated and real estate services were
boosted by the growing population.
Construction activity expanded by 15%
year-on-year as Qatar’s infrastructure
investment program is gathering
momentum. We would expect to see the
Islamic financial sector grow with the
rest of the economy — even outpacing
©
IFN Country Correspondents
conventional finance — as it fuels the
growth of the non-hydrocarbon sector.
The improving investment environment
has also had further positive impact on
the financial sector. QIB’s credit rating
has been reaffirmed by international
credit ratings agency, Capital Intelligence
(CI), with a financial strength rating
(FSR) of ‘A’ and an outlook of stable
in its April 2014 report, in view of
the significant improvement in QIB’s
financing asset quality and stabilized
return on average assets. QIB’s FSR was
also supported by the its low leverage
and good capital adequacy ratios, as
well as by improved liquidity, which
have benefited from more efficient use of
capital and sustained growth in customer
deposits. Islamic Holding Group, one
of Qatar’s leading Shariah compliant
investors, also reported a net profit of
QAR2.96 billion (US$804.65 million)
for the first quarter of 2014, up 40%,
compared to the corresponding period
in 2013. In recent domestic financing
developments, Barwa Bank was recently
involved as mandated lead arranger for
real estate developer Ezdan Holding
Group Company’s US$500 million
syndicated financing, which closed last
month. We would expect to see similar
encouraging reports in respect of the
other Qatari Islamic financial institutions
as they continue to benefit from the
wider improvements in the domestic
regulatory framework and the publicspending led infrastructure boom.
Finally, QIB and other Qatari Islamic
institutions have also been making waves
abroad. There have been reports that
meetings were held in the UK between
representatives from QIB and the UK
government, purportedly linked to the
UK’s upcoming sale of GBP200 million
(US$335.5 million) of sovereign Sukuk this
financial year, amid reported interest in
the GCC economies for participation in
the Sukuk. There have been reports of a
merger agreement between QIB and Bank
Asya in Turkey, with Bank Asya having
recently announced the agreement for the
purpose of obtaining regulatory approval
for the deal. QIB also participated in a
US$250 million syndicated loan to Zain,
the Kuwaiti telecoms operator. QInvest,
one of Qatar’s leading Islamic investment
banks recently completed a US$65 million
financing deal with Petainer, a European
refillable plastic container manufacturer.
Amjad Hussain is a partner at law firm K&L
Gates’ corporate and finance practices. He can
be contacted at Amjad.Hussain@klgates.com.
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BAHRAIN: Dr Hatim El-Tahir
director of Islamic Finance Knowledge Center, Deloitte &
Touche
BANGLADESH: Md Shamsuzzaman
executive vice president, Islami Bank Bangladesh
BELGIUM: Prof Laurent Marliere
CEO, ISFIN
BERMUDA: Belaid A Jheengoor
director of asset management, PwC
BRUNEI: James Chiew Siew Hua
senior partner, Abrahams Davidson & Co
CANADA: Jeffrey S Graham
partner, Borden Ladner Gervais
EGYPT: Dr Walid Hegazy
managing partner, Hegazy & Associates
FRANCE: Kader Merbouh
co head of the executive master of the Islamic finance, ParisDauphine University
HONG KONG & CHINA: Anthony Chan
founder, New Line Capital Investment Limited
INDIA: H Jayesh
founder partner, Juris Corp
INDONESIA: Farouk A Alwyni
CEO of Alwyni International Capital and the chairman
of Centre for Islamic Studies in Finance Economics and
Development
IRAN: Majid Pireh
Islamic finance expert, Securities & Exchange Organization
of Iran
IRAQ: Khaled Saqqaf
partner and head of Jordan & Iraq offices, Al Tamimi & Co
JAPAN: Serdar A Basara
president, Japan Islamic Finance
JORDAN: Khaled Saqqaf
partner, Al Tamimi & Co
KOREA: Yong-Jae Chang
partner, Lee & Ko
KUWAIT: Alex Saleh
partner, Al Tamimi & Co
LEBANON: Johnny El Hachem
partner – corporate, Bin Shabib & Associates
LUXEMBOURG: Said Qaceme
senior manager of Advisory & Consulting, Deloitte Tax &
Consulting
MALDIVES: Aishath Muneeza
deputy minister, Ministry of Islamic Affairs, Maldives
MALTA: Reuben Buttigieg
president, Malta Institute of Management
MAURITIUS: Sameer K Tegally
associate, Conyers Dill & Pearman
MOROCCO: Ahmed Tahiri Jouti
senior consultant, Al Maali Islamic Finance Training and
Consultancy
NEW ZEALAND: Dr Mustafa Farouk
counsel member for Islamic financial institutions, The
Federation of Islamic Associations of New Zealand (FIANZ)
NIGERIA: Auwalu Ado
Shariah auditor, Jaiz Bank
OMAN: Riza Ismail
senior associate, Trowers & Hamlins
PAKISTAN: Muhammad Shoaib Ibrahim
managing director & CEO, First Habib Modaraba
PHILIPPINES: Rafael A Morales
managing partner, SyCip Salazar Hernandez & Gatmaitan
QATAR:Amjad Hussain
partner, K&L Gates
RUSSIA: Roustam Vakhitov
managing partner, International Tax Associates
SAUDI ARABIA: Nabil Issa
partner, King & Spalding
SENEGAL: Abdoulaye Mbow
Islamic finance advisor, Africa Islamic Finance Corporation
SOUTH AFRICA: Amman Muhammad
CEO, First National Bank-Islamic Finance
SINGAPORE: Yeo Wico
partner, Allen & Gledhill
SRI LANKA: Roshan Madewala
director/CEO, Research Intelligence Unit
SWITZERLAND: Khadra Abdullahi
associate, Investment banking, Faisal Private Bank
SYRIA: Gabriel Oussi,
general manager, Oussi Law Firm
TANZANIA: Khalfan Abdullahi
head of product development and Shariah compliance, Amana
Bank
THAILAND: Shah Fahad
vice-president and head of strategic marketing and product
development, Islamic Bank of Thailand
TURKEY: Ali Ceylan
partner, Baspinar & Partners
UK: Roshan Madewala
CEO and director, Research Intelligence Unit
UAE: Rima Mrad
partner, Bin Shabib & Associates
US: Joshua Brockwell
investment communications director, Azzad Asset Management
YEMEN: Moneer Saif
head of Islamic banking, CAC Bank
IFN Correspondents are experts in their respective fields
and are selected by Islamic Finance news to contribute
designated short country reports. For more information
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sasikala@redmoneygroup.com
23rd April 2014