QSE index revision stipulates 80% trading days, minimum 5% velocity
March 09 2017 08:54 PM

The Qatar Stock Exchange announced revision to its key benchmark methodology, stipulating that the constituents must have traded during at least 80% of the trading days and recorded annualised velocity of minimum 5% during the final quarter of the 12-months review period.

“For a stock to enter the QE Index it must have traded at least 80% of the trading days of each of the four quarters of the 12 months review period," the bourse said in a communiqué. The changes are effective from April this year.

The changes to the index methodology come after a decision by QSE Index Committee and the approval of the Qatar Financial Markets Authority. The decision is designed to enhance the tradability of the index and ensure that consistent liquidity is a determinant of index inclusion.

The move also comes in the wake of exchange traded funds sponsored by Masraf Al Rayan and Doha Bank are set to dot the capital markets any time soon.

On the constituent short-term velocity, the QSE said the existing QE Index stocks must have recorded annualised share velocity of greater than 5% during the final quarter of the 12-month review period. Velocity is the proportion of total shares that have changed hands in one year.

As of now, the main barometer has QNB, Industries Qatar, Ooredoo, Masraf Al Rayan, Commercial Bank, Qatar Islamic Bank, Qatari Investors Group, Qatar Electricity and Water, Doha Bank, Nakilat, Barwa, Ezdan, Milaha, Qatar Insurance, United Development Company, Gulf International Services, QIIB, Aamal Company, Mazaya Qatar and Vodafone Qatar.

It is yet to be known how many constituents would figure in the 20-stock Qatar Index once the new changes stipulating 80% trading days and 5% share velocity come into effect from April.

The moves come as part of the bourse's semi-annual review of the indices to better reflect the fundamentals and ensure that the selection and weighting of the constituents continues to reflect the purpose of the index.

The maximum weight a single stock can hold within the index is 15%. If during the index review any stock is found to exceed this weight, then the stock’s market value is capped and any excess weight is distributed proportionately among the remaining constituents.

The bourse has seven sectors – banks and financial services, insurance, industrials, realty, telecom, transportation and consumer goods and services in the ‘All Share Index.’

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