Investment Banking in... Qatar?
Recently it was announced that Egypt, Bahrain, United Arab Emirates, Yemen, Libya, Maldives, and Saudi Arabia will all cut ties to Qatar with the goal of putting pressure on the government to stop funding Islamic terrorist groups.
Qatar needs to import nearly all of its food products. Before the diplomatic crisis, hundreds of food trucks used to enter Qatar from the Saudi Arabian border. Now Qatar has to import food using airways.
Improving transit costs and the decrease in the number of countries who are willing to supply food to Qatar will increase inflation. Even though Qatar is a wealthy country, most of its 2.7m citizens are workers who are from the low-income group who cannot even afford the current food prices and cross the Saudi Arabian border to shop.
Increasing food prices will put pressure on the government. It has been recently announced that Qatar has just a four weeks of wheat left. They have recently been conducting talks with Turkey and Iran to negotiate food imports.
Do you think that this will put enough pressure on the government to cease this funding and type of activity?
If and when the government cuts ties to terrorist organizations, do you think that it will be a good target for investment banks to expand? After a quick search, I found a few Investment Banks already have feet on the ground. The only big American bank on the list was Citi, which on its website says they offer a full range of investment banking services, but I was unable to find what specific groups they had. The only open position is for a Country Treasurer, which looks like someone who is a mix of a trader and general liaison to represent and expand their business in the future. Do you think that Citi will keep this position open and its plan to expand given the recent news?
Also from the article on the Recent Crisis in Qatar:
Qatar is officially the richest country in the world. Its GDP per capita (after its 1160% growth during the 1970s, then a 53% contraction during the 1980s, and at the end, another 94% increase in the 1990s) rose to $71,481 in 2015, and the total GDP to $166.9bn. Most of this money comes from the export earnings from petroleum and natural gas (60% of the GDP).
This wealth, of course, pushes Qataris to invest in foreign companies. They even had to establish Qatar Investment Authority (QIA) in 2005 in order to invest the revenue from the budget surplus of the government. The current value of the fund now exceeds $335bn in assets.
Private investors and QIA now owns various stakes in German carmaker Volkswagen; retail brands such as Harrods and Tiffany & Co.; international banks and financial institutions such as Barclays, Credit Suisse; and companies in the energy sector such as Rosneft and Shell.
To me, this seem like it has a great opportunity for ECM, DCM, and sell-side M&A groups to service could-be clients. Also, due to the government surplus, taxes are very low with a personal income tax of 0% and corporate flat rate of 10%. I'd love to hear your thoughts, especially from more senior monkeys.