Qatar announces revamp of sovereign wealth fund

Reuters/Jonathan Ernst

• The $475bn fund has had a lower profile since 2013
• Its local stock holdings may be moved to a separate entity to be listed
• Policymakers aim to increase foreign investment in Doha-listed firms

Qatar will reorganise its sovereign wealth fund in what will be its latest economic reform following the successful staging of last year’s Fifa World Cup.

The Qatar Investment Authority (QIA) is the world’s 10th largest sovereign wealth fund with $475 billion of assets under management according to the Sovereign Wealth Fund Institute.

The country’s ruler announced the reform via a royal decree issued this week. It did not provide further details other than to state it was effective from May 16.

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The QIA, which wholly owns investment vehicle Qatar Holding, holds stakes in various local companies including Qatar National Bank, the Middle East and Africa’s biggest bank by assets, most other domestic banks and former telecoms monopoly Ooredoo.

Although it does not disclose publicly its portfolio, the QIA owns various foreign assets including minority stakes in automaker Volkswagen (10.5 percent) and British supermarket chain Sainsbury’s (15 percent) according to filings by these companies.

The fund also has a vast real estate portfolio spanning major cities such as New York, Paris, Milan and London, including the department store Harrods.

Many of these purchases drew global headlines and established QIA as a major international investor. However, the fund has adopted a lower profile since the 2013 departure of ex-chief executive Sheikh Hamad Bin-Jaber al-Thani, who was also Qatar’s former prime minister and foreign minister.

QIA and the country’s pension fund are mulling how to attract more foreign investors and boost trading activity on Doha’s bourse. They could consolidate some of their local stock holdings into a separate entity that would list on the stock exchange, Bloomberg reporter this week, citing unidentified sources.

Although every listed company allows up to 49 percent foreign ownership and many full non-Qatari ownership, almost all stocks are far below these limits, bourse data shows.

Policymakers hope the new, locally listed entity will further improve trading activity on the Qatar Stock Exchange. Annual trading turnover was QAR 160.4 billion ($44.1 billion) in 2022, up from 112.8 billion riyals a year earlier, according to the bourse’s annual report. That compares to Saudi Arabia’s bourse turnover of SAR 1.71 trillion ($455.5 billion) in 2022.

Yet the number of shares traded on Qatar’s stock market slipped 3.5 percent year-on-year to 45.4 billion, with volumes falling each quarter throughout 2022.

This decline mirrors a more sluggish economic outlook following the staging of the World Cup in late 2022. Qatar’s GDP will expand 2.3 percent this year, down from almost 5 percent last year, according to S&P Global Ratings.

Last November, Qatar signed a long-term liquefied natural gas supply agreement with Germany, its first with Europe’s top economy. A similar, 27-year deal with China ahead of the expansion of the Gulf country’s vast North Field will boost LNG production by 63 percent by 2027, according to the World Bank.

Over the past decade, Qatar has reduced its reliance on hydrocarbons, and will likely implement its long-delayed pledge to introduce VAT sometime this year, the World Bank predicts.