Qatar lifts foreign ownership limits on shares ahead of MSCI upgrade

Qatar Exchange, the country’s only bourse, said the foreign ownership limit would be increased to 49 per cent from 25 per cent.
Investors monitor stock market activities at the Qatar Exchange. Reuters
Investors monitor stock market activities at the Qatar Exchange. Reuters

Qatar has lifted foreign ownership limits for its publicly trade companies as competition between Arabian Gulf states for overseas stock investment heats up.

Qatar Exchange, the country’s only bourse, said the foreign ownership limit would be increased to 49 per cent from 25 per cent.

“It’s an overdue move and very positive for the Qatari market,” said Mohammed Ali Yasin, the managing director at National Bank of Abu Dhabi’s brokerage arm. “It’s an attempt to increase their share or exposure to the emerging markets index.”

Shares listed on the UAE bourses – the Abu Dhabi Securities Exchange, Dubai Financial Market and the Nasdaq Exchange – along with those on Qatar’s stock market are due to be included into MSCI’s Emerging Markets Index next month.

Several UAE companies announced their intention to increase their foreign ownership limits ahead of the country’s inclusion in the index in anticipation of greater interest in local stocks from international institutional investors.

Qatar’s emir, Sheikh Tamim bin Hamad Al Thani, disclosed the new foreign ownership limits in a statement to the Qatar News Agency yesterday.

“Non-Qataris, who are not citizens of any of the Gulf Cooperation Council countries, are permitted to own shares of the Qatari companies listed on Qatar Exchange with a percentage not exceeding 49 per cent of the capital of any of the companies listed on the exchange, subject to the decision of each company to amend its articles of association,” the statement said.

This month, MSCI released the list of stocks from Qatar and the UAE that will be incorporated into the emerging markets index.

In the UAE, they are Abu Dhabi Commercial Bank, Aldar Properties, Arabtec, DP World, Dubai Financial Market, Dubai Islamic Bank, Emaar Properties, FGB and National Bank of Abu Dhabi.

In Qatar, they are Al Rayan Bank, Barwa Real Estate, Commercial Bank of Qatar, Doha Bank, Ooredoo, Qatar Electricity and Water, Qatar Industries, Qatar Islamic Bank, Qatar National Bank and Vodafone Qatar.

“The increase in threshold also indirectly opens up Qatar’s banking system for more strategic investors,” Mr Yasin said. “Qatar is a rich country with lots of wealth and their banking sector is a profitable one.”

Shares listed on Qatar’s Exchange have risen 48 per cent this year amid investor expectations of bigger pools of liquidity in trading local stocks. The Abu Dhabi Securities Exchange General Index has jumped 18.8 per cent in the same period, while the Dubai Financial Market General Index has surged 31.1 per cent.

MSCI, whose indexes are used to measure performance by money managers with an estimated US$8 trillion of assets, upgraded shares listed on the bourses of Qatar and the UAE in June last year from their previous “frontier markets” designation.

Separately, Saudi Arabia’s market regulator has submitted a draft set of regulations for foreign investors that has been submitted to the kingdom’s Supreme Economic Council, Bloomberg reported last week. MSCI in April 2012, reintroduced coverage of Saudi stocks after a more than three-year hiatus because of a dispute with the exchange over the licensing of its information.

“Qatar and UAE were ahead of their times, but Saudi is a catch-up story,” Mr Yasin said. “Saudi would be the jewel in the crown of many fund managers if they could access it directly, rather than using swaps or other financial instruments. If they opened up and were included into MSCI it would be the most important event to happen in Mena market, attracting more attention to the Gulf region.”

halsayegh@thenational.ae

Follow us on Twitter @Ind_Insights

Published: May 27, 2014 04:00 AM

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