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Qatar’s investors are leaving

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By The Qatar Insider

 

August 10, 2017

 

In what has to be a headline causing great dismay in Doha, Bloomberg News is reporting that “Almost Half of Qatar’s Traditional Investor Base Has Cut Ties With the Country.”

 

As Qatari banks plan to go to market for funds, they will have to offer higher yields to attract investors, who are spooked by the potential risk around the country.

 

After the severing of relations with Qatar by Saudi Arabia, the United Arab Emirates, Egypt and Bahrain, over Doha’s ties to terrorism and extremists, Qatar has faced trouble in the financial markets.

 

“That led to a drop in foreign deposits in June, the steepest in almost two years, and a record jump in the three-month Qatar Interbank Offer Rate,” Bloomberg reported.

 

According to Tariq Qaqish, the managing director of the asset management division at Mena Corp. Financial Services in Dubai, the deterioration to Qatar’s economy as well as possible further downgrades of Qatar’s long-term debt will mean that Qatari banks will continue to pay higher prices on the market.

 

“In the short term, psychology will pay a big role in pricing new debt issues as investors are uncertain of the magnitude of the problem and, most importantly, the length,” Qaqish said.

 

The length and magnitude of that problem, of course, are in Qatar’s hands. If the country would renounce its terror-supporting ways and make the necessary changes to its behavior, it can end the standoff. The longer it takes to do take those steps, the longer it will continue to face challenges in the financial markets.

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