The London-listed Qatar Investment Fund swung to a loss in its 2016 financial year as the oil price rout affected its investments in Qatari and UAE equities, the company said.
Net loss in the year to the end of June 30 reached US$37.9 million, compared with a net profit of $22.6m a year earlier, the fund said.
“During the 12 months the entire GCC region was hit by lower oil prices and bearish sentiment and Qatar was no exception,” said the fund’s chairman, Nick Wilson.
The near-19 per cent fall in the Qatari stock market during the financial year also affected the fund: its net asset value per share plunged to 20.8 per cent.
At the end of the period, the fund had invested in 23 equities, 19 in Qatar and four in the UAE, including Industries Qatar, Qatar National Bank and Qatar Electricity and Water Company. In the UAE, its investments include Dubai’s Emaar Properties, Dubai Parks & Resorts, and the Abu Dhabi lenders First Gulf Bank and Abu Dhabi Commercial Bank.
The fund invests up to 15 per cent of its resources in listed companies in the Arabian Gulf. Banking and financial services is its largest sector, with a 43.3 per cent share.
The economy of Qatar, and the Gulf as a whole, is slowing down because of the drop in energy prices, affecting the profitability of listed equities. Qatar, an Opec member and the world’s biggest exporter of liquefied natural gas, will post its first fiscal deficit in 15 years this year as the result of lower energy revenue.
But the fund expects prospects for economic growth to improve with a robust infrastructure pipeline, continued fiscal spending and efforts to diversify the economy away from energy income. The fund is projecting economic growth of 3.7 per cent for this year and next.
“The board views the future of the company with confidence and firmly believes that continued growth in the non-hydrocarbon Qatari economy combined with improving demographics will lead to significant improvements in corporate profitability,” said Mr Wilson.
FTSE Russell carried out the first of two tranches to upgrade Qatar to emerging market status from frontier status this month. The second tranche is due to take place in March next year.