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Monday, April 12, 2021

Qatar, Saudi hint at potential future investment opportunities

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With the reconciliation between the Gulf states, economic outlooks are looking more positive than ever.

Qatar’s foreign minister said that the country’s sovereign wealth fund could potentially invest in Saudi Arabia and other Gulf countries following the signing of Al Ula declaration last week which ushered in a new phase of reconciliation between GCC member states. 

Sheikh Mohammed bin Abdulrahman Al-Thani, who is also chairman of the Qatar Investment Authority, told the Financial Times that “if there are opportunities that we see in the future and we see a continuation of the political will of the countries to engage, we are very open.”

Saudi Arabian investors are also expected to start shifting their funds into the Qatari market, according to renowned ratings agency, Fitch

“This will provide Qatari banks with an additional pool of liquidity, which will diversify their funding base, reduce their reliance on price-sensitive government-related entity and corporate deposits, and cut their funding costs,” the ratings agency said.

Qatar’s foreign minister also added that Doha had agreed to suspend legal cases against Saudi Arabia and its allies, including lawsuits filed at the World Trade Organisation and the International Court of Justice

“When it comes to the appropriate schedule, these legal cases should then be terminated,” he added.

With Saudi Arabia keen to attract foreign investments as part of crown prince Mohammed bin Salman’s diversification agenda, and Qatar’s banking sector’s dependence in the GCC on non-domestic funding, both countries have much to gain if they re-establish economic ties with each other. 

Previously, the cutting of ties between the blockading quartet and Qatar led to the withdrawal of about $30 billion of non-resident deposits from the country’s banks in June-October 2017, mainly by Saudi depositors and some from the UAE, according to Fitch. It tightened the country’s foreign-currency liquidity, and Qatari authorities stepped in with $40 billion of sovereign liquidity injections, Fitch said.

The easing of the stand-off will also help bring back local tourism, which would help revive Qatar’s real estate and hospitality sectors. 


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