With the US and Europe "drying up", global asset managers such as Ashmore are flocking to Qatar’s capital market, which also has the potential to see Qatari riyal debt issuances of QR10bn in the next two to three years, according to QInvest co-chief executive officer Hussain Abdulla.
Addressing a panel session at the second Qatar Financial Market Forum, jointly organised by the Qatar Financial Centre and Bloomberg Intelligence, he said the combined gross domestic product (GDP) of the Middle East and North Africa is $4tn, of which the GCC economies form $2tn. Moreover, the region's sovereign wealth funds' assets are valued more than $2tn.
In the past, global asset managers came to the GCC to tap the enormous capital but it is not the case anymore, according to him.
"There is dryness in the US and Europe. All these asset managers are now using the GCC as a hub," he said in a specific reference to the recent agreement between Qatar Investment Authority (QIA) and Ashmore Group to launch a $200mn corpus Qatar equity fund.
The Ashmore Qatar Equity Fund, with QIA as an anchor investor and Ashmore Group as the first partner, will play a pivotal role in enhancing investor relations, quality of disclosure, research coverage, and improve liquidity on the local bourse.
The sovereign wealth fund's active asset management initiative to seed funds by re-allocating shares in QSE listed companies to these external managers will add to the available free float in the market and create confidence among investors and encourage both local and global investment institutions to participate.
"I believe the main driver (behind the global asset managers to set base here) is the oil and gas," he said, adding the ongoing review of the equity capital market and its legislation in Qatar have now been completed.
The local bourse had recently amended the list of securities eligible for the market making to include more stocks.
Referring to the opening up of the markets for international investors, he said it would encourage more foreign investments into the country and the move by Ashmore Group is an example.
Qatar has liberalised the foreign ownership limits in the Qatar Stock Exchange listed companies up to 100% and the country also witnessed the launch of third financial sector strategy, through which the sector is expected to contribute as much as QR84bn to Qatar’s gross domestic product (GDP) by 2030.
Abdulla said the initial public offering of Meeza through book-building process, the first of its kind in the country, was fraught with challenges, especially around its timing and the pricing. However, the offer (which was oversubscribed 111%) highlighted the investors' confidence in the system.
"If there is much larger equity or IPO story, we can open up to international investors assuming we have the necessary infrastructure, especially when it comes to settlement," he said.
On the Qatari riyal issuance in the debt market, he said "with the number of banks that we have, we can easily reach QR10bn within two to three years and we need to provide liquidity."
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