Al-Mansoori and Mustafawi shake hands after signing the pact that will see the launch of a new Islamic index on the QE next Monday.
By Santhosh V Perumal/Business Reporter
The Qatar Exchange (QE) is all set to witness the launch of a new Islamic index from next week as part of measures to broad-base key barometers and as a precursor to the creation of Shariah-principled exchange traded funds (ETFs).
Set to debut on January 7, the index, jointly developed with Al Rayan Investment, is based on QE-listed stocks of minimum free float size and liquidity that are Shariah-compliant according to Al Rayan’s Shariah supervisory board.
As the first exchange-sponsored Shariah-compliant index in the region, this will accelerate the development of the Islamic asset management industry in Qatar.
“The new index meets the demands of the ETF envisaged by Al Rayan Investment for listing on the QE,” Rashid al-Mansoori, CEO of Qatar Exchange, said.
As per the indicative list, Industries Qatar, Masraf Al Rayan, Barwa and Qatar Islamic Bank are expected to figure prominently in the index, whose weighting scheme has been customised to ensure both tradability and diversification across individual stocks and sectors.
Qualifying stocks are ranked according to liquidity-adjusted free float market capitalisation. A tiered-weighting methodology is then applied where fixed allocations are assigned to individual sub-segments of the basket.
Customised weights are assigned to the index constituents to ensure diversification, such that the weight of top component is 15%, second 12%, third 10%, next two 7.5%, next eight constitute 40% in total, second smallest banding has 2.5% each and bottom two make up 3%.
“We have also adopted an alternative weighting scheme for the index whereby large caps retain the edge in terms of weight, but small and mid cap stocks belonging to some of the best performing sectors are still well represented,” al-Mansoori said.
QE’s independent index committee governs the index’s weighting methodology and adherence to index rules.
The index is total return-based, reflecting dividend reinvestment and has been calculated back to January 2007. Since inception, the index has provided over 148% return and has returned over 14% in 2012.
Considerable emphasis has gone in to making the QE Al Rayan Islamic index an attractive vehicle to access the Qatar growth story, according to Adel Mustafawi, board member and executive director of Al Rayan Investment. “We hope the regulatory environment will allow us to launch a related ETF later this year, yet another first in Qatar,” Mustafawi, also the CEO of Masraf Al Rayan, said highlighting that Al Rayan Investment’s focus on innovation will continue.
QFC looking for Qatarlyst strategic partner
The Qatar Financial Centre (QFC) is scouting for a strategic partner for Qatarlyst, its wholly-owned subsidiary.
“The QFC Authority board believes that Qatarlyst has now reached a reasonable stage of maturity, where divestment to, or entering into a new partnership arrangement with, a strong third party may be the best option to leverage the current positive situation, develop the business and secure wider market acceptance,” a Qatarlyst spokesman said.
Qatarlyst was established in November 2008 with the intention of providing the next generation web-based technology solution for brokers and insurance firms to negotiate, place and accept large commercial risks electronically.
PricewaterhouseCoopers has been appointed as independent consultants to lead the handling of the divestment/partnership search. White & Case will be assisting on the legal side.
Qatarlyst has already received expressions of interest from several potential partners and there are likely to be others interested in taking it to the next stage of development.
Khalid al-Mughesib, the deputy CEO of Qatarlyst, is leading the negotiation with all interested parties as the shareholder’s representative.
However, no further details were available regarding when Qatarlyst is to be divested and to what extend the QFCA will retain the shareholding.
Qatarlyst group consists of Qatar Insurance Services (QIS), Qatarlyst Limited (formerly Ri3K) and Qatarlyst SPC (the sole and exclusive provider of licences to customers to access and use the Qatarlyst system).