Amwal on outlook for 2015 (“The Peninsula”)

Tuesday 13 January 2015
22 Rabial I 1436
Volume 19
Number 6309
Price: QR2
www.thepeninsulaqatar.com
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Oil prices to stay low longer
Lower prices to hit earnings of chemical and real estate companies, say experts
BY SATISH KANADY
DOHA: Global oil prices are
most unlikely to rebound to $100
levels in near term. If the prices
stay at current levels, Qatar may
run a budget deficit in the current fiscal, though marginal, top
market analysts said yesterday.
Oil prices will stay low longer.
The market will eventually balance settling $70-$75 a barrel in
long term, In short term, the market could come down even to $40
levels a barrel before it makes a
turnaround, Fahmi Alghussein
CEO, Amwal and Afa Boran, Head
of Asset Management, Amwal said.
“If you ask us whether the
benchmark oil prices will go
down to $40 levels, I would say,
yes. But if you ask me whether
it will stay there for long… probably not”, Afa said. Incidentally,
in line with Amwal’s expectations,
the US bank Goldman Sachs
slashed it oil forecasts yesterday
saying fuel prices needed to stay
low for much longer.
The bank analysts said crude
oil prices could come down much
further in the short term, possibly
into the high $30s a barrel before
the market saw a rebound.
If oil prices continue to stay
at $50 levels, Qatar will face a
marginal deficit in its budget
ranging $5bn-$10bn. But Qatar’s
Sovereign Wealth Fund (SWF)
is healthy enough to meet its
planned funding. The estimated
savings of the government are
more than $150bn. If you look at
these figures, the projected capital
spending for the next five years
will not be a problem, Fahmi and
Afa noted.
On the possible funding gap, in
the event of dropping oil prices,
Fahmi said private sector is capable of filling the gap. “You could
see more corporate debts and
project financing coming soon
into Qatari market”, Afa said.
Fahmi said a $50 oil price will
naturally affect future company
profits and stock prices, but will
depend on the country’s current
budget surplus, accumulated
savings and government willingness to continue with spending
plans. Qatar’s stock price already
reflects this outlook, as it is
already down by 15 percent from
their September peaks.
On the impact of oil on corporate earnings, Fahmi noted chemical companies and real estate
companies will be most affected.
Chemical companies will be most
directly affected as they get cheap
feedstock, so a decline in selling
prices would lower profits.
Real estate prices and real
estate stocks will be affected as
well, as they reflect expectations
of government spending which
in turn reflect regional investor
sentiment. Oil services will see a
moderate impact, depending on
the length and nature of contracts
with clients. However, Amwal is
bearish on new listings and IPOs
in Qatar. “If you ask me today, I
would say this is not the best time
for listings”, Afa said. Amwal does
not foresee any companies going
public early this year.
THE PENINSULA
From Left: Mohammed Al Mulla, Vice President, Amwal; Fahmi Alghussein and Afa Boran at the press conference
yesterday.
KAMMUTTY VP
Amwal’s equity funds top best market products
DOHA:
Two
investment
funds of Qatar-based Asset
Management Company Amwal
continued to emerge as leading
products in the market in 2014.
Amwal is Qatar’s first independent asset management firm,
set up in 1998 and wholly owned
by Sheikha Hanadi Nasser bin
Khaled Al Thani. Amwal manages
equities and balanced portfolios
across GCC and Turkey.
“Our product ‘Qatar Gate Fund’
is the only Qatar equity fund to have
outperformed the Qatar Exchange
Index every calendar year since its
inception nine years ago. Our GCCfocused product ‘Al Hayer Fund’
generated outperformance of 3.7
percent in 2014, in volatile market
conditions”, Amwal’s CEO Fahmi
Alghussein and Afa Boran, head of
Asset Management, said yesterday.
Qatar Gate Fund, in partnership with Ahli Bank, is the best
performing Qatari equity fund.
Over the last five years our team
has cumulatively delivered 110
percent returns vs average 95
percent of other funds and 102
percent of the closest competitor, outperforming the average
fund by 15 percent and closest
competing fund by 8 percent, he
told reporters.
Amwal’s Qatar Gate Fund has
consistently delivered the lowest
downside volatility versus peers,
across different timeframes. This
is particularly evident in the last
year, when the downside volatility
of the Fund’s portfolio was only 19
percent, while other funds exhibited downside volatility of around
25 percent, said Afa Boran.
Afa said both Qatar and UAE
have performed very well since
MSCI’s initial announcement of
planned upgrade to emerging market status. Since the decision was
announced, Qatar is up around 45
percent, while UAE is up around
70 percent. It is important to note
that UAE was a cheaper market to
start with, he said.
“Our investment philosophy is
long-term value investing, similar
to private equity investing, but with
close monitoring of stock prices
with an aim to take advantage of
volatility…We aim to exploit risks
that we understand, and avoid
those that we cannot predict”, he
said.
THE PENINSULA
Oil slumps
5pc to near
6-year lows
NEW YORK: Oil slumped
5 percent to near six-year
lows yesterday, accelerating
its months-long rout after
Goldman Sachs slashed its
short-term price forecasts
and Gulf producers showed
no signs of curbing output.
Brent was down $2.34 to
$47.78 a barrel by 11:47am EST
(1637 GMT), after dropping as
low as $47.18 to its lowest since
April 2009. US crude oil was
down $1.98 at $46.38 after earlier hitting a low of $45.90, also
near six-year low.
Analysts at Goldman Sachs
cut their three-month forecasts for Brent to $42 a barrel
from $80 and for the US West
Texas Intermediate contract
to $41 from $70 a barrel. The
bank cut its 2015 Brent forecast to $50.40 a barrel from
$83.75 and US crude to $47.15
a barrel from $73.75.
Despite declining investments in US shale oil, the
main driver in the current supply glut, production will take
longer to come down, Goldman
said in a report.
Tariq Zahir of Tyche Capital
Advisors said a bottom was
hard to predict as prices varied
so quickly. “I figured we’d see
$40 in the near term, but everything seems to be happening
quicker than expected,” Zahir
said. “You’re going to get some
more margin call selling in here,
there will be a bounceback that
will be sharp and violent.”
Walter Zimmerman of
United-ICAP said the market’s
sharp changes in the last few
months make it impossible to
predict an average price for the
year. “In today’s markets, that
are so widely volatile, an average price is completely useless,”
Zimmerman said. “There’s a
million barrels a day of excess
production,” he said. “That is
what is driving the price.”
REUTERS
Doha Bank committed to supporting SMEs ‘Delicious’ Ford GT
DOHA: Doha Bank organised
a SME customer meet related
to the projects financed under
Al Dhameen guarantee programme of Qatar Development
Bank (QDB).
Addressing the event, the
bank’s CEO Dr R Seetharaman
said SMEs are expected to play
an important role in supporting
Qatar’s economic diversification.
Doha Bank will participate in
Qatar’s diversification story by
encouraging the SME sector.
“Doha Bank already enjoys a
sizeable SME customer base &
a strong corporate and retail
business franchise with branch
presence across the country to
meet customers growing requirements. At Doha Bank, we know
that doing business in today’s economic climate is challenging - and
that situations and business needs
can change overnight’, is what he
reiterated. SME sector in Qatar
is promising, and is expected to
grow rapidly and will play an
important role in Qatar’s overall
growth,” Dr Seetharaman noted.
By providing financial guarantees for projects, QDB seeks
to promote the entrepreneurial
spirit of the private sector and
offer services that will facilitate
the development, growth and
diversity of the national economy,” said Jawaher Al Noaimi,
Al Dhameen Manager at Qatar
supercar wows Detroit
DETROIT: Ford attempted
to land a knock-out blow to its
rivals at the Detroit auto show
in revealing a dazzling new GT
supercar yesterday.
The glitzy presentation at the
cavernous arena named after the
boxer Joe Louis was an attempt to
grab the headlines at the United
States’ premier auto show, where
power and luxury have roared
back to the fore. Ford had given
very little away in the lead-up to
the first major international auto
show of the year, but speculation
had been rife that it had something special in mind.
And it did not disappoint, unveiling a GT for next year that immediately won glowing approval from
car enthusiasts who flooded social
Officials pose for a group picture.
Development Bank. “Al Dhameen
has helped SMEs in Qatar overcome the challenges they face
when seeking commercial financing. The programme has also
helped banks overcome reservations about financing small and
medium-sized companies due to
the high-risk ratio of some in the
sector. In 2014 alone, Al Dhameen
guaranteed over 69 clients with a
total value of QR174m,” she said.
Doha Bank is committed
to continue meeting financial
requirements of SME sector in
Qatar and also through its offices
in Dubai, Abu Dhabi, Sharjah and
Kuwait. Doha Bank has started
its operations in India which
will help businesses coming from
India to start in Qatar as well as
corporates who want to do business with corporates in India.
Doha Bank has already demonstrated its long term commitment to the success of SMEs
by supporting Al Dhameen
guarantee programme of Qatar
Development bank. The bank
has recently financed five new
projects under this programme
such as setting up a state of the
art auto battery factory, establishing a dental clinic employing
the most advanced equipment,
welding electrodes, bitumen
unit, and tourism project. The
projects are equipped with most
advanced equipment & machines.
The total outlay on these projects
will exceed QR50m.
THE PENINSULA
media to proclaim what one called
on Twitter “delicious”.
The new GT, an update to the
legendary sports car last produced
a decade ago, boasts 600 horsepower and twin-turbocharged V6
eco-boost engines. Mark Fields,
Ford’s chief executive said the
Ford GT will go into production
in 2016. The GT will be available
late 2016, Fields said, marking the
50th anniversary of the company’s
original high-performance racer,
the GT40.
Ford had already been in the
spotlight in Detroit, snapping
up the award for best truck, for
the new aluminum F-150, while
the Volkswagen Golf was named
North American car of the year.
AFP
The Ford GT on display at the North American International Auto Show in
Detroit yesterday.