HE Sheikh Abdullah: A major fillip for growth opportunities.
Qatar Stock Exchange’s (QSE) status upgrade to “emerging markets” by MSCI Emerging Markets Index and Standard & Poor’s has topped the list of Qatar Financial Markets Authority’s (QFMA) achievements in 2014, in addition to becoming the largest weightings of Middle East financial markets in the MSCI index.
HE the Governor of Qatar Central Bank Sheikh Abdullah bin Saud al-Thani, who is also QFMA chairman, said in the QFMA annual report that the upgrade enhances international status and a wide flow of foreign investments to the QSE, as well as increase trading and growth opportunities.
“This important achievement came after the amendments and additions to the applicable legislations made by the QFMA and with continuous co-operation and co-ordination with both of Qatar Central Bank (QCB) and Qatar Financial Centre (QFC) in order to develop Qatari capital market,” the governor said in the report.
Other achievements stated in the report include the Qatar economy’s 16th and second rankings in the international and Arab levels, respectively, in terms of general index of global competitiveness. The economy also ranked first among Arab countries and 15th internationally in the creativity and innovation sub-index.
Official statistics issued by the Gulf Co-operation Council (GCC) database council said Qatar’s economy also ranked first in investments among GCC countries in December 2014.
QFMA CEO Nasser Ahmad al-Shaibi added that QFMA contributed in amending foreign investment law leading to raise the non-Qatari ownership percentage and treat GCC citizens as Qataris. It also contributed in amending the calculation mechanism for the ceiling of non-Qatari ownership in shareholding companies offered for trading in QSE, which is based on the total share capital and not on the free float.
Al-Shaibi said the QFMA also contributed in issuing Law No (17) of 2014 to exempt non-Qatari investor’s share in the profits of companies whose shares are offered for trading in the financial market.
The QFMA’s efforts also extended to include issuing the rules governing margin trading in the Qatari market and regulate registrations of external auditors and financial evaluators of listed entities and entities subject to the QFMA’s jurisdiction to enhance transparency and disclosure levels of financial statements of the listed companies, he added.
“The results of these efforts reflected positively on the QSE performance that achieved the highest growth rate in the traded shares value at the international level during 2014 (January/November) at 166%, according to the World Federation of Exchanges (WFE) statistics, in addition to achieving the highest growth rate in the market value at the level of the Middle East and Europe markets based on the same statistics,” al-Shaibi said.
He added, “The QFMA co-operated with other financial regulators in the state for developing instructions and controls for the applications of the US FATCA (Foreign Account Tax Compliance Act) on American investors in the Qatari market, as well as the QFMA’s participation in Qatar’s e-Government Strategy.”
The QFMA has sought to develop the third edition of the 2014 annual report to include more information and statistics about Qatar’s economy and the Qatari capital market at the Arab, international, and GCC levels.
The annual report said Qatar has a prominent status on the world map as one of the richest countries in the world in terms of per capita income. Qatar’s economy ranked third after Russia and Iran in terms of the volume of natural gas reserves. It was also classified as having the largest supply of liquefied natural gas (LNG) in the world, supplying up to 25% of the global LNG needs.
According to the report, Qatar has diversified its income resources and expanded its productive base to develop a strong private sector through gaining a full and active membership of the World Trade Organisation (WTO) and the issuance of relaxed business regulations to open several sectors for foreign investors.
“Qatar has a good number of benefits that encourage investments such as low electricity; water and gas consumption charges; zero taxes on importing heavy machines, equipment, spare parts and raw materials; zero taxes on exports; zero quantitative quotas on imports; no restrictions on foreign currency exchange and overseas profit transfer; and flexible immigration and resident laws,” the report said.
It also stated that Gross Domestic Product (GDP) last year was estimated at QR771.71bn ($212.01bn).
In 2014, Qatar’s economy got a distinct rank at the international level in many fields according to the classification of international institutions, either in terms of ease of doing business, anti-corruption and transparency levels, anti-money laundering, or in the field of economic freedom, the global competitiveness and credit ratings.
Qatar’s economy has a high grade of confidence and is classified within high levels of classifications of international credit rating agencies of investment grade. Qatar’s economy credit is classified at (AA) with a stable outlook, according to Standard & Poor’s (S&P), at (Aa2) with a stable outlook, according Moody’s, and 87 degree rating with a stable outlook, according to the Trading Economics Website.
In global competitiveness, Qatar’s economy ranked 16th out of 144 countries with a score of 5.24 out of 7 in the 2014-15 World Economic Forum Global Competiveness Index.
In economic freedom, Qatar ranked 30th at the international level among 178 countries covered by the classification with a score of 71.2 out of 100, according to the 2014 Index of Economic Freedom issued by The Heritage Foundation.
Qatar’s economy also ranked 26th in the international level and 2nd in the GCC with a score of 69 out of 100, according to Corruption Preparation Index 2014 of Transparency International, the global coalition against corruption level.
According to the 2014 edition of the Basel Anti-Money Laundering (AML) Index developed by the Basel Institute on Governance, Qatar’s economy ranked 37th at the international level and 2nd in the GCC after Oman, with a score of 4.96, which indicates less than average of probability of occurrence of terrorist financing or money laundering in Qatar.
According to the World Federation of Exchanges (WFE) statistics, the QSE achieved the highest growth in the market value of listed shares by the end of 2014, at 166.12% to go up to $54.73bn, or about QR199.29bn.
According to the statistics of the Arab Monetary Fund, the QSE ranked 2nd in terms of growth rate of the market value of listed shares during 2014 compared with the end of 2013. This growth amounted to 21.80% to reach QR676.79bn by the end of 2014.
The QFMA issued a number of new regulatory legislations that strengthen the regulatory and supervisory role of the QFMA on the Qatari capital market, the report said.
The QFMA exerted intensive efforts in the areas of control and supervision on the parties related to the operation in the Qatari capital market to emphasise that the Qatari market deserves the international recognition, and to keep the performance of the Qatari market and persons dealing in the market compatible with the international standards, as well as to stabilise the markets and protect investors.
The QFMA conducted the control on listed companies by following-up their disclosures and declarations issued via various media so as to ensure implementing the disclosure of all listed companies about the periodic financial statements during the year, and reviewing reports of corporate governance of listed companies and request to amend some of them to comply with the Corporate Governance Code issued by the QFMA.
The QFMA conducted 30 inspections (periodical or sudden) in 2014 and received 27 complaints. It also has conducted 20 investigations in suspected violations from financial services companies and their staff, in addition to the violations of the brokerage firms, the report added.
In 2014, the Appeals Committee held 11 case hearings proceeded by closed sessions to look into and decide on appeal cases and requests of a stay of QFMA proceedings.
The QFMA also considered four appeals registered at the end of 2013, and issued its decisions on seven appeals and requests of a stay of QFMA proceedings.
“The QFMA managed to negotiate with seven regulators around the world and to reach a final draft of Memoranda of Understanding that could add an item that supports the dual listing of companies cross-border whenever possible,” the report said.
The QFMA also received five final approvals for signing bilateral MoUs and put them in force; two of them have already been signed this year.
The QFMA has continued co-operation with international organisations, especially, the IOSCO by taking active participation in the IOSCO’s committees and projects such as attending the annual conference and replying to co-operation requests, complying to increase non-official international co-operation with the organisations and the international financial bodies to consolidate ties, and to hire regional and international expertise for the benefit of the QFMA’s projects.
