The iShares MSCI Qatar Capped ETF (NASDAQ:QAT) has underperformed emerging market indexes for the past several years, and today’s big plunge certainly won’t help matters.
Headlines that have hit the market stating that Saudi Arabia, Bahrain, Egypt, and the U.A.E. have, according to a Bloomberg.com article titled “Escalation in Gulf Deals Blow to Qatari Banks,” “suspended most connections with Qatar, in an unprecedented move designed to punish it for ties with Iran and Islamist groups in the region” have sent the lone “Qatar Equity” tracking ETF QAT (iShares MSCI Qatar Capped, Expense Ratio 0.64%, $41 million in AUM) more than 8% lower today, down to January of 2016 levels.
The aforementioned article also points out that “Qatari banks, already stretched by financing demands of the $200 billion 2022 World Cup, took a head-on blow from its neighbors’ abrupts decision to cut economic and diplomatic ties. At risk are the foreign deposits, especially from the six-nation Gulf Cooperation council.” It’s also worth pointing out that Qatar is the world’s largest producer of LNG (liquefied natural gas), as well as one of the world’s richest countries.
QAT as an ETF typically only trades about 21,000 shares daily, but we have mentioned it in this piece before as very relevant not only in terms of the Middle East Equity market ETF landscape but also when terror headlines dominate the tape, since this would not be the first time some linkage has been made with Qatar and potentially financing terror operations by radical groups on a worldwide basis.
As implied by the Bloomberg article, QAT has a very heavy allocation to the Financial sector (over 54%), while Industrials (14%), Real Estate (12%) and other sectors round out the portfolio, so it is understandable why today’s headlines may have negative lasting implications for the country’s economy and stock market.
The iShares MSCI Qatar Capped ETF (NASDAQ:QAT) was trading at $16.80 per share on Monday morning, down $1.80 (-9.68%). Year-to-date, QAT has declined -11.86%, versus a 9.11% rise in the benchmark S&P 500 index during the same period.
Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.
Paul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.
He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.