High oil and gas prices have meant a high growth of liquidity in the country and prospective investors have money to burn.
However, a shortage of Initial Public Offerings (IPOs) has meant investors are unable to park their funds anywhere. Investors in Qatar and the rest of the region, studies have shown, tend to opt for IPOs and are wary of the secondary market.
A report by the Bahrain-based Gulf Finance House (GFH), which gives an outlook for the region for the present quarter, said: "The magnitude of liquidity growth has been reflected in the sizeable oversubscription of the sole IPO in the first half (H1) of 2008. The IPO of Gulf International Services (GIS), a holding company owned by Qatar Petroleum (QP), attracted $2.45bn in funds, compared to the required $0.47bn."
The report said: "At nearly 2.5 percent of 2008 forceast GDP, the amount of funds pooled into the IPO is a proxy of the excess liquidity conditions in the Qatari market, which has also helped push the benchmark equity index to an all-time high during Q2 2008. It is worth noting Qatar may see three IPOs in 2008."
Looking at real estate and banks in the country, GFH said the rapid increase in prices of assets like real estate means banks here are exposed to high risks. By ploughing too deeply into real estate, the banking sector here would be adversely affected by any price reversal. "However, strong shareholder and government support and continued supply-demand imbalances in the housing market suggest a real estate-driven banking sector crisis is still far from sight."
Addressing the issue of the country's rampant inflation, GFH said the tools of choice are price controls as exemplified by the price freeze on steel and the freeze on rents. The rent controls are observed largely in the breach.
The Pen
Is it just me or does NOTHING in this article state that Qatar is 'hungry' for IPOs? The papers are going to get into trouble if they put words in to the government's mouth.
Qatar is NOT hungry for IPOs this year, we're pretty much good to go. But just as ANY country IPOs are in demand and no where as much as in Qatar by the public to make a quick flip.
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