(MENAFN- The Peninsula) Arsalan Altaf |
The Peninsula
Doha, Qatar: Companies listed on the Qatar stock exchange (QSE) will see strong recovery in their earnings in 2024-25, boosted mainly by the expansion of LNG production and Qatar's drive to grow and diversify the non-oil and gas economy, a research report has forecast.
“With the base effects of higher oil prices and a hugely successful FIFA World Cup in 2022 soon to be in the rearview mirror, we see strong aggregate earnings pick up for the QSE in 2024-25 driven primarily by the ramping up of the NFE project (and its downstream effects) and continued government efforts to grow/diversify the non-oil/gas economy as espoused in the Qatar National Vision 2030,” said a year-end strategy report on Qatari stocks issued recently by QNB Financial Services.
Aggregate QSE earnings declined 7.7% year-on-year in first three quarters of 2023 after falling 11.2% in the first half of 2023. This improving trend is predicted to continue in the last quarter of 2023. The third quarter saw sequential improvement in earnings by 7%, compared to negative 4.5% in the second quarter. Moreover, the yearly earnings decline in quarter three decelerated to just 0.2% from 15.7% in the second quarter and 9.6% in the first quarter, the report said, noting recovery in both the non-oil/gas and construction sectors.
“We believe the worst is over, assuming the regional conflict does not escalate further and the global economy is not tipped into a violent recession by tighter monetary policies,” it said. The research report expected Qatar's GDP to grow at an average of 3.2% over the next three years, up from 2.4% expected this year, according to the IMF.“Qatar's economic outlook is supported by its huge LNG expansion, sustained domestic demand and various ongoing sporting, business and other tourism related events building from the successful hosting of the World Cup.”
It said that the demand for Qatar's gas is expected to remain strong for the foreseeable future on the back of geopolitical developments, specifically in Europe, with demand for LNG expected to peak between mid-2030s and mid2040s. Qatar has long-term LNG supply contracts with global energy firms including Sinopec, Eni, Shell, TotalEnergies, CNPC, Petrobangla, and Conocophillips with an average contract length of 23.8 years. The report said that while energy prices have come off their multi-month highs, they remain at attractive levels, which should translate to higher government revenue/surplus for Qatar, enabling flexibility in government spending and improving credit availability within the economy.
Qatari businesses are also set to continue benefitting from the success of the FIFA World Cup hosting as well as a series of sports and cultural events taking place in 2023 and 2024, including Expo 2023 Doha, the MotoGP Qatar Airways Grand Prix 2023, the AFC Asian Cup Qatar 2023 and the World Aquatics Championships Doha 2024.
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