Qatar raised the foreign ownership limit for shares listed on the QSE less than a week before the MSCI inclusion to emerging market.

Bloomberg/Dubai

Qatar’s decision to raise the foreign ownership limits for shares listed on the Qatar Stock Exchange is a welcome move to benefit markets, say experts. “It’s fantastic news for the market,” Nayal Khan, head of institutional sales and trading at Naeem Holding in Dubai, said by phone yesterday. An increase in foreign ownership limits will also improve inflows of funds from “active investors” from global emerging markets to Qatar, he said. Qatar raised the foreign ownership limit for shares listed on the QSE less than a week before an MSCI upgrade to emerging market status.

Investors outside the six-nation Gulf Co-operation Council will be able to hold as much as 49% of a company listed on the QSE after HH the Emir Sheikh Tamim bin Hamad al-Thani gave instructions to raise the limit from 25%, Qatar News Agency reported late on Monday. The Ministry of Economy and Commerce and the Qatar Financial Markets Authority will take necessary measures to put directives into effect, the report said.

“Clearly, it’s done with the MSCI in mind,” Julian Bruce, head of institutional trading at EFG-Hermes UAE in Dubai, said by phone. “If normal convention is followed, each individual company has to hold an extraordinary general meeting to approve the change in its structure. With the MSCI event right upon us, you would assume that it might not be able to go through in time.”

Qatar’s index has gained 49% in the past 12 months amid bets an upgrade to emerging from frontier markets status would lure investors. MSCI on May 14 named 10 Qatari companies, including QNB and Industries Qatar, to its emerging markets gauge. The switch may attract about $649mn to the bourse, HSBC Holdings said in a note to investors May 12.

The QSE’s 20-stock Qatar Index QE Index yesterday jumped 0.8% to 13,499.56 at the close in Doha, the highest since at least 1998 when Bloomberg started tracking the market. The gauge rose for a fourth day, with QR1.7bn ($467mn) of shares traded compared with a one-year daily average of 560mn riyals.

The proportion of non-Qatari ownership will be calculated based on the total capital of each company and not its non-tradable shares, Qatar News Agency said.