Buoyed by USD165bn of government spending on infrastructure and development projects, Qatar’s economy is building momentum and diversifying away from oil and gas.
Investors are now focusing on Qatari’s market yield of 4.18 per cent. This is 105.7 per cent higher than the average dividend yield of the US S&P 500.
The Qatari Exchange’s dividend yield in 2013 was 4.42 per cent, more than thrice that of Japan’s Nikkei.
Over the last four years, the Qatar market has yielded 58.6 per cent more than the MSCI World Index and 13.28 per cent more than Bloomberg’s GCC 200 Index.
Qatar will soon be elevated to emerging market status by MSCI, which will widen the range of investors looking at the Qatari stock market. A recent survey by Reuters found that over 50 per cent of Middle East investment managers were expecting to raise allocations to Qatari equities, the largest positive change among the Middle East regions and markets.
Despite these attractions, Qatar’s stock market is trading on an undemanding 12.7 times prospective earnings compared to 16.9 times in Kuwait; and 15.2 times in Saudi Arabia, even after the recent hardening of labour rates, which may impact margins there.
Qatar plans to spend over USD165bn in the next four years on infrastructure projects ranging from airport expansion to rail, road and sports stadia.
Nick Wilson, chairman of London-listed Qatar Investment Fund, says: “Investors today face sparse opportunities for generating income and Qatar shows the value of looking further afield. Dividends are a vital component of investor returns. Qatar’s quoted companies have a tradition of paying high and growing dividends, which gives solid reassurance to investors.”