GCC: Qatar’s limited exposure and strong buffer provide comfort – Deutsche Bank

The GCC saga involving economic and diplomatic blockade of Qatar by the Saudi led alliance is well into its second week without further escalation or capitulation in Qatari assets, notes the analysis team at Deutsche Bank.

Key Quotes

“Ongoing mediation efforts by various parties have yet led to a resolution. Prima facie, the ferocity of sanctions is unprecedented and is expected to weigh on Qatar’s economy. However, Qatar’s limited economic and financial exposure to these nations, its strong sovereign balance sheet, and QNB’s strong liquidity position should help the sovereign and key corporations to withstand the current crisis at least in the near term.”

“At current valuation, we believe investors should position for likely continued recovery, but we avoid aggressive long positions in the event of further escalation. The shorter end of the curve, especially 22s, offers better relative value for Qatar exposure.”