Qatar Exchange to get $1bn inflows on FTSE upgrade

15 September 2015

Market will be included on secondary emerging markets index from 2016

  • Qatar Stock Exchange’s upcoming inclusion on the UK’s FTSE Russell secondary emerging markets index will bring $1bn in foreign investment
  • Bourse is working with family-owned companies to encourage them to list on the market

The Qatar Stock Exchange (QE) is expected to see $1bn on investment inflows when the market is included on the London-based FTSE Russell secondary emerging markets index, according to the bourse’s CEO Rashid al-Mansoori, speaking on the sidelines of the Arab IPO Summit held in Dubai on 14-17 September.

The promotion will take place in two equal tranches in September 2016 and March 2017 to allow the market to absorb liquidity.

“This is pleasant news,” said Al-Mansoori. “We have been working hard to achieve all the requirements and this is recognition that we have ticked all the boxes around liquidity and increasing foreign ownership limits.”

Companies can now increase their foreign ownership limit to 49 per cent, or request an even higher limit. The move, which boosted liquidity, was a key requirement from FTSE, and US-based MSCI, which upgraded the market to its emerging market index in June 2014.

The index will include 23 stocks, based on a combination of market capitalisation, free float, liquidity and foreign ownership limits.

Al-Mansoori does not expect the same volatility that followed the MSCI upgrade to hit the QE in 2016.

“After the announcement, the index was up and turnover reached QR850m [$234m] a day,” said Al-Mansoori. “But issues in Syria affected the market.”

Liquidity has fallen off while share prices have fallen in 2015 due to global volatility and oil prices.

The QE has had just one initial public offering (IPO) since 2010, from state-owned Mesaieed Petrochemical Holding Company in February 2014. The QE is working with family-owned companies and the regulator to create a more encouraging environment for IPOs. However, cash-rich companies are unwilling to submit to the expense and scrutiny of listing.

Al-Mansoori expects the next IPO to take place in early 2016.

The FTSE index will make also the market more attractive to potential companies by introducing institutional investors and boosting liquidity.

There are several companies preparing to list, including Qatar First Bank and exchange traded funds (ETFs), according to Al-Mansoori.

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