QAT: An LNG-Infused GDP Growth Spurt Beckons

2025-03-14 01:05:37 ET

Summary

• The iShares MSCI Qatar ETF hasn't really made any progress over the past year, but we think this could change as the macroeconomic conditions improve.
• GDP growth, which likely grew at 1.5-2% last year, will expand by 2.6-2.7% this year, with a tremendous spurt in the following year (5.5%) as higher LNG capacity comes online.
• Qatar could control a quarter of the global LNG market by the end of this decade, while structural reforms have been put in place to generate average GDP growth of4%.
• QAT suffers from liquidity challenges and is dominated by banks, which are currently witnessing subdued loan growth.
• QAT's valuations look cheap relative to other Gulf alternatives, and it also comes across as one of the more appealing mean-reversion candidates within the global universe.

Introduction

The iShares MSCI Qatar ETF ( QAT ) is a 10-year-old product that covers 33 stocks that are exposed to the economy of Qatar. While QAT’s tracking index - the MSCI All Qatar Capped Index - attempts to cover Qatari-based stocks, investors should also be prepared for periods (when it is unable to procure at least 25 Qatar classified stocks) where it may also pursue non-Qatari stocks that have at least a 10% economic exposure....

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