OPEC Departure Sends Qatar ETF Lower

Among single-country exchange traded funds, the iShares MSCI Qatar ETF QAT doesn't get a lot of attention, but that changed Monday.

QAT, the only U.S.-listed ETF focusing on stocks in Qatar, declined on news the country will depart the Organization of Petroleum Exporting Countries (OPEC).

What Happened

QAT, which debuted over four and a half years ago, lost 1.27 percent on volume that was more than double the daily average. That barely dents the fund's 22.6 percent year-to-date, enough to easily make QAT one of this year's best-performing single-country emerging markets ETFs.

Qatar is one of the smallest oil producers in OPEC, but one of the world's liquefied natural gas (LNG). The country's relationship with Saudi Arabia has become increasingly strained, perhaps prompting Qatar's move to leave OPEC.

What's Next

Qatar's Minister of State for Energy Affairs Saad al-Kaabi said: “Qatar would attend an OPEC meeting scheduled for Thursday and Friday in Vienna and would abide by its commitments, he said, adding that Doha would focus on its gas potential,” reports Reuters.

QAT tracks the MSCI All Qatar Capped Index and holds 26 stocks. Despite Qatar's status as a major energy producer, many energy companies there aren't accessible to traditional investors. As such, QAT allocates less than 5 percent of its weight to the energy.

QAT's leverage to oil and LNG prices comes by way of a more than 50 percent weight to financial services firms, which provide financing for energy equipment and projects. Alone, Qatar National Bank command's nearly 23 percent of QAT's weight.

What's Next

Qatar's OPEC departure underscores “the growing dominance over policy making in the oil market of Saudi Arabia, Russia and the United States, the world’s top three oil producers which together account for more than a third of global output,” according to Reuters.

Including Qatar, there are 15 OPEC members, but two of the world's three largest oil producers, the U.S. and Russia, are not members of the cartel.

QAT has a trailing 12-month dividend yield of almost 4 percent.

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