Qatar losing World Cup looks good bet as scandal hurts markets

Bloomberg

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Men sit at a shoemaker's stall with a replica of the FIFA World Cup trophy in the Souq Waqif traditional market in Doha, Qatar. Men sit at a shoemaker's stall with a replica of the FIFA World Cup trophy in the Souq Waqif traditional market in Doha, Qatar.
Betting on Qatar losing the right to host the 2022 soccer World Cup was suspended by a U.K. bookmaker because of new allegations about the bidding process.
Gala Coral Group Ltd. stopped accepting wagers because its oddsmakers believe there’s a good chance the tournament will be taken away from the desert emirate, spokesman John Hill said. The uncertainty caused stocks and bonds to tumble on Qatari markets yesterday.
Mohammed bin Hammam, a former soccer executive from Qatar, paid more than $5 million to influence officials before tournament voting in 2010, the U.K.’s Sunday Times newspaper reported June 1. Bin Hammam declined to comment on the story, while Qatari organizers said he played no role in their bid and that they had the highest standard of ethics.
U.K. bettors staked a “five-figure” sum on Qatar losing the tournament at odds as high as 5-1 yesterday, Hill said by phone yesterday. A successful $1 bet would yield a $5 profit, plus the stake.
Former U.S. federal prosecutor Michael Garcia is leading a probe for soccer ruling body FIFA into the 2018 and 2022 World Cup bidding process and is scheduled to submit his team’s findings next month.
The Sunday Times allegations, based on what it called millions of leaked e-mails, put FIFA “into a very difficult situation,” according to Mark Pieth, a Swiss anticorruption expert who led a panel of governance advisers set up by FIFA in 2011. The ruling body could face “the most formidable lawsuits” from Qatar if it strips the emirate of the 2022 tournament, he said by phone.
Change infavorites
The U.S., which competed to host the 2022 edition, is the even-money favorite to get the event if it’s taken away from Qatar, Gala Coral said on its website. South Korea is a 9-4 chance, followed by Japan at 4-1 and 8-1 shot Australia.
FIFA’s board awarded the hosting duties to the 2018 and 2022 events during the same vote. Russia won the 2018 tournament and Qatar, which FIFA’s reviewers said would be too hot to host it in the normal June-July period, was awarded the 2022 event.
The next World Cup starts June 12 in Sao Paulo and FIFA will make a decision on a possible re-scheduling of the 2022 edition to the winter to protect players and fans from temperatures of as high as 50 degrees Celsius (122 degrees Fahrenheit) after the end of Brazil tournament.
Qatar’s stocks dropped the most in the world yesterday and bonds also fell as concern deepened that the nation may lose the hosting rights, threatening tournament-related investment.
Qatar, holder of the world’s third-largest natural-gas reserves, plans to spend as much as $200 billion on projects including stadiums, roads and hotels as it prepares for the event.
Markets tumble
The benchmark QE Index tumbled 2.4 percent, the most among more than 90 benchmarks tracked by Bloomberg globally, to close at 13,221.29. The yield on Qatar’s 5.25 percent bond due January 2020 rose four basis points, the most since March, to 2.41 percent at 4:19 p.m. in Doha.
FIFA said two days ago that Garcia’s panel will issue a report in July into the possibility of corruption in the process.
“There might be re-voting and that’s all very negative news,” Hisham Khairy, the Dubai-based head of institutional trade at Mena Corp. Financial Services LLC, said by telephone. “Everyone is worried about it and everybody is reducing their positions.”
Bond sales in the country are off to the worst start in three years as companies from telecom provider Ooredoo QSC to developer Ezdan Holding Group take loans as banks flush with cash cut lending rates.
Stocks on Qatar’s main index have gained 42 percent in the past 12 months on speculation the country’s promotion to emerging-market status at MSCI Inc. would prompt inflows from investors tracking the index provider’s gauges. The upgrade, effective this week, may attract $649 million to the nation’s bourse, HSBC Holdings Plc said in a report May 12.

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