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Quantifying Qatar ETF’s World Cup Vulnerability


These are not the best of times of the iShares MSCI Qatar Capped ETF (QAT) and oil is not entirely to blame for the fund’s woes.

Most QAT’s near-term issues come courtesy of disgraced FIFA President Sepp Blatter and intensifying speculation that Qatar will lose its status as the host nation for World Cup 2022. To be fair, similar chatter is being applied to Russia, which is scheduled to host the international football tournament in 2018.

For now, Qatar remains the host of the 2022 World Cup, but the OPEC member’s grasp on those hosting duties is tenuous now that Blatter has been sent packing. The international football community was stunned in December 2010 when FIFA awarded Qatar the 2022 World Cup. Questions surrounding that decision were, and still are, logical. After all, the World Cup is played entirely outdoors and during summer months, making a nation located in a desert region a curious choice to host an event of this nature. Last week, we reported that QAT was sliding in large part to lost World Cup speculation. [Blatter’s Bungle’s Hurt Qatar ETF]

Now, there are ways to quantify the impact on QAT should Qatar lose its 2022 hosting privileges.

“According to U.K. bookmaker William Hill, the odds on Qatar losing the rights to the most-watched sporting event in the world were slashed to 5-4 from 5-1 on Tuesday, odds that the event still takes place in the desert state were set at 4-7,” reports Emerging Equity.

One cannot head into his or her sportsbook of choice and bet on QAT’s fortunes, but this is what markets have to say about the possibility of Qatar losing its World Cup hosting privileges: “Last year, Credit Suisse warned that Qatar’s stock market could plunge by 20% if it was stripped of the 2022 tournament. Bank of America Merrill Lynch has estimated the potential losses could be around $16 billion,” according to Emerging Equity.

Down 3.1% this month, QAT is showing its vulnerability being stripped of its host nation status. That makes sense as the country is plowing $200 billion into World Cup-related infrastructure projects.

The bulk of the market value for Qatar’s equity market is held by banks and real estate firms, companies expected to benefit from the World Cup. QAT reflects as much with an almost 62% weight to the financial services and a 14% allocation to industrials. [Catalysts for the Qatar ETF]

iShares MSCI Qatar Capped ETF