According to a May 27th report from J.P.Morgan Cazenove, there are actually two separate investigations involved in the FIFA bribery scandal, and it is still possible that Qatar could eventually lose its right to host the 2022 World Cup. JPM Cazenove analysts Naresh Bilandani and Paul Formanko highlight that all the chips are not yet on the table in this affair, and the ongoing second investigation could eventually derail Qatar’s bid to host the Cup.
FIFA says “Russia and Qatar will be played”
Of note, when the story broke on Wednesday, FIFA announced that despite the ongoing bribery scandal there are no plans for a revote or rescheduling regarding the nations hosting the 2018 and the 2022 World Cups.
FIFA spokesman Walter de Gregorio commented to the media that “Russia and Qatar will be played.”
Currently two separate investigations
Bilandani and Formanko note that the data/document seizure of Swiss authorities in criminal proceedings opened on March 10th in relation to FIFA 2018 (Russia) / 2022 (Qatar) World Cup bidding process, and the arrests of international football officials (including a number employed by FIFA) in Zurich on Wednesday after their indictment in the U.S. for bribery and money laundering in connection with broadcast/marketing rights of FIFA tournaments, are separate events. Both the FIFA office and Swiss law enforcement authorities have emphasized that these events are a part of two separate investigations.
The Office of the Attorney General of Switzerland notes that the decision to move forward with the arrests was because so many related parties would be in Zurich for the FIFA presidential election. Sepp Blatter of Switzerland and Prince Ali bin al-Hussein of Jordan are the two candidates in the election. Blatter is the current President of FIFA running for his fifth consecutive term and al-Hussein is the Vice President of FIFA for Asia.
JPM stays underweight MENA
JPM currently remains UW on MENA including Qatar. Bilandani and Formanko point out that “Qatari financials stocks like Doha Bank, Qatar Insurance and Ezdan Real Estate could be positively impacted tomorrow on passive money inflows going into MSCI inclusion/free-float increase tomorrow. However, general sentiment in domestically exposed names in Qatar like QNB, Masraf, CBQ could stay muted/negative with all eyes on the FIFA election on Friday.”
They also argue that Blatter’s re-election as FIFA president could result in a relief rally in Qatar, however, they believe the FIFA bribery scandal and possibility of him losing will continue to weigh on Qatari stocks in the near term.
