Economic Factors Affecting Qatar’s Market

Question

1- What are the economic factors that affect Qatar stock market?
2- Analysis the factor that affect the consumer goods and services industry in Qatar?
3- Analysis the factor that affect the company which is Qatar Fuel in Qatar?

Solution

Economic Factors Affecting the Qatar Stock Market
Introduction
Qatar Stock Market was formed in 1997 in Dohi and consists of 43 companies. The main aim of the stock market’s formation was to provide the companies with capital, so as to support the Qatar economy. The market also aimed at providing the citizens with relevant market information. Qatar’s main source of income is the sale of oil and natural gases, and it ranks amongst the top producers in the global oil market. However, there are a number of economic factors that affect how the stock market of Qatar operates, such as:
1 .Interest Rates
This is the amount that is charged by the Federal Reserve Banks to investors because of borrowing funds from them. Federal Reserve Banks use this as a tool to control inflation (Qatar: Land ownership, property, real estate and agricultural laws handbook, 2011, Pg. 112). The Feds raise interest rate to discourage banks from borrowing funds from them. This in turn makes the banks to increase the interest rates for loans borrowed by the consumers, and consecutively, citizens and industries will be discouraged from borrowing money from the banks. This brings about reduction of money flow in the economy which in turn lowers the stock exchange market in Qatar. The Federal banks can also lower the interest rates charged. This would in turn encourage people to borrow more, hence bringing about an increased amount of money flow in the economy, and therefore people spend more. This makes the stock exchange market of Qatar rise.
2. High Cost Of Living
In 2014, the cost of living in Qatar rose by 2.6 percent. This is according to statistics by the Ministry Of Development Planning and Statistics. The rise in prices of diesel, education fee and house rent is a major blow in the stock market of Qatar. Many people living in Dohi were forced to shift to other areas whose cost of living was lower, and this affected adversely the stock market.
3. Fuel and Natural Gas Prices
In the mid-1990s, the prices of oil reduced. This in turn resulted into the stock market of Qatar getting affected adversely. A further blow on the stock market came about when OPEC introduced QUOTAS on crude oil production. OPEC quotas on crude oil production reduced the number of external markets and this made Qatar’s stock market decline further. The two factors contributed toward decline in the Qatar Stock Market, especially in the mid-1990s.
4. Competition from Foreign Markets
The Qatar stock market faces a direct competition from external markets such as Kuwait on export of petroleum and its products (Mirakhor & Bacha, 2013, Pg. 89). This has become a major concern on the Qatar economy because the stock market reduces the prices of it is products to suit the new competition. The economy of Qatar grows at a slower rate because of the reduction in the prices of stock.
Apart from the petroleum and natural gases industries in Qatar, there Is also a consumer goods and services industry in Qatar. This industry is also affected by the culture, lifestyle and demography of the people living in Qatar.
a. Culture
This is what people believe in, their customs, knowledge and material objects. Qatar has people from different nations; hence it is a multi-cultural metropolis. Globalization has resulted in the population internalizing western culture and consumerism and this is evident in Qatar. People in Qatar have different lifestyle, culture, religion and eating habits. Every person, according to their own culture, is triggered to consume a good or service in Qatar, although some people try to adopt the Qatari culture.
b. Lifestyle
Most people in Qatar live an urban lifestyle. The income here separates people in classes. Those earning more are likely to spend more on consumer goods and services in comparison to those earning less. In addition, married people are likely to spend more than singles, and this brings about the difference in spending on consumer goods and services in Qatar. Consumers’ desire triggers one on what to purchase and what not to, and this brings about different lifestyles in Qatar.
c. Demography
American State Department stated that about 77 percent of all Qatar residents are immigrants in 2002 (Tremblay & Tremblay, 2012, Pg. 78). Only a few of the immigrants have brought their families over with them, hence most Qataris are single. This has in turn brought about an imbalanced sex ratio, and therefore the consumer goods and services industry produce is imbalanced. This greatly dictates on how the consumers will consume the available goods and services in order to balance the deficit.
Qatar country has many industries that makes the country’s economy .Qatar petroleum is an example of the industries and it’s owned by the state. It is activities are directly linked with the government planning agencies and policy making bodies in Qatar. However, the company is affected adversely by some factors such as:
• Workers Strikes.
• Oil bunkering.
• Piracy.
• Competition.
• Oil rig.
Workers Strikes
A series of workers protests which occurred in the 1950s and 1960s demanding for better pay, improved working conditions and the reduction in their working hours. This in turn greatly affected the production process of the company adversely as there was inadequate man power. In July 1951, 900 laborers refused to report to work, and this halted the production process leading to some direct and indirect losses.
Oil Bunkering
This is the stealing of oil from oil pipelines and deports. Qatar Petroleum suffers from this blow as individuals who include some corrupt members of the management, steal the oil for their own benefits, leading to the company making huge losses.
Piracy
According to Wehrey, piracy and armed robbery against ships is also another blow to the Qatar Petroleum Company (Wehrey, 2009, Pg. 56). These pirates hijack oil tankers, thus halting the process of transportation of oil and its products to their destinations in the Gulf region, making the company to make huge losses. The pirates also keep off many customers from buying from Qatar Petroleum and go for other oil producers due to fear of hijack.
Competition
The Qatar Petroleum Company faces a stiff competition from other fuel producers, such as Kuwait and Russia. Due to this stiff competition, the company is compelled to lower its prices on its products in order to fit in the competitive market for oil and its products.
Oil Rig
This is where the tankers transporting oil suffers from oil leakage into the sea which the world is against due to marine life. Oil tankers accidents are also an issue of major concern to this company as it makes the company incur huge losses.
REFERENCES
Tremblay, V. J., & Tremblay, C. H. (2012). New perspectives on industrial organization. New York: Springer.
Wehrey, F. M. (2009). Saudi-Iranian relations since the fall of Saddam: Rivalry, cooperation, and implications for U.S. policy. Santa Monica, Calif: Rand
Mirakhor, A., & Bacha, O. I. (2013). Islamic capital markets: A comparative approach. Hoboken, N.J: Wiley.
Qatar: Land ownership, property, real estate and agricultural laws handbook. (2011). Washington, DC: International Business Publications, USA.