The Qatar Stock Exchange (QSE) is set to witness global index compiler London Stock Exchange entity FTSE Russell double the investible weight 20 of the 22 selected QSE-listed companies, effective from March 20.
The entities whose ‘investible weights have been doubled are Al Meera Consumer Goods Company, Barwa Real Estate, Commercial Bank, Doha Bank, Ezdan Holding, Gulf International Services, Industries Qatar, Masraf Al Rayan, Medicare Group, Ooredoo, Qatar Electricity and Water, Nakilat, Qatar Insurance, QIIB, Qatar Islamic Bank, QNB, Milaha, Salam International Investment, United Development Company and Vodafone Qatar.
This is the second tranche of the FTSE’s Qatar emerging market upgrade as announced in 2016. In September 2016, FTSE Russell confirmed the inclusion of all the earlier indicated 22 stocks in its secondary emerging market index.
The decision to include 22 scrips in its global equity index (GEI), of which half of them are large caps, comes in the wake of FTSE Russell upgrading Qatar to secondary emerging market category from the frontier status in twin tranche, a move that is seen to witness higher funds inflow from overseas.
In February this year, FTSE Russell confirmed that the second 50% tranche of Qatar transitioning to secondary emerging market status within the FTSE GEI series would be implemented in conjunction with the March 2017 semi-annual review.
However, Aamal Company will have an increased investible weight from 20% to 28% as the sum of restricted shareholders is “more restrictive than the official foreign ownership limit”.
Another constituent Qatari Investors Group would retain an unchanged investable weight due to it “failing the headroom test” (which is done on a quarterly basis), it said.
As per FTSE, Qatar, with high per capita income, comes under investment grade in creditworthiness and has sufficient broad market liquidity to support sizeable global investments and also has “reasonable and competitive” implicit and explicit transaction costs.
Moreover, Qatar’s bourse, which follows T+3 settlement system, has sufficient competition in brokerage business to ensure high quality intermediary services. There has also been sufficient competition to ensure high quality custodian services in the QSE, which has “rare” incidence of failed trades.
The QSE has already been upgraded to emerging markets by MSCI and Standard & Poor’s-Dow Jones.
As part of efforts to improve liquidity, the bourse has allowed brokerage houses to be liquidity providers for individual scrips and some entities have taken advantage of the scheme. Moreover, margin lending has also been allowed in principle to further boost daily trading volumes and turnover in the market. According to Doha Bank group chief executive Dr R Seetharaman, Qatar has the potential for $10bn to $15bn overseas funds inflow since its upgrade into emerging
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Business / Business
FTSE Russel to double the weight of 20 QSE firms from March 20
As part of efforts to improve liquidity, the QSE has allowed brokerage houses to be liquidity providers for individual scrips, while allowing margin lending in principle to further boost daily trading volumes and turnover. PICTURE: Noushad Thekkayil
