Qatar: the best bet in the Middle East?

The Qatari market "looks like a quality play" among frontier markets, says David Stevenson in the FT. Its economy is based on exploiting the world's third-largest natural-gas reserves, which have ensured that the country is the world's richest: GDP per capita is around $75,000. Upgrading the infrastructure continues to bolster growth, with around $225bn expected to be spent over the next five years, some of which will be devoted to the 2022 World Cup.

The scope for social upheaval is minimal, given the virtually non-existent unemployment and the absence of a significant Sunni/Shia split, as Panmure Gordon points out. According to The Economist, Qatar is the least likely state in the Arab world to suffer unrest.

The local stockmarket has proved relatively well insulated from global jitters. It is barely in the red this year, says Stevenson. And valuations look reasonable on an estimated 2012 p/e of eight. "A culture of dividend-paying has taken root", and the dividend yield is expected to reach 5.4% next year. Corporate governance, meanwhile, is "decent" if not quite up to Western standards. All in all, Qatar looks the best bet for adventurous investors interested in the Middle East or north Africa. They can play it through the London-listed Qatar Investment Fund (QIF) , which is currently on a discount to net asset value of 16%.

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