A large number of experts on Saturday said that the Qatar Stock Exchange's move to lower the face value of listed companies to QR1 from QR10 is expected to have a positive impact on the stock market.
They said it was important to raise awareness among stock market investors in the country or outside the country on the goal and the nature of the new system.
Dean of Qatar University's College of Business and Economics Dr Khalid al-Abdulqader said that the new system will have a very positive impact on the Qatar economy, which is very attractive and promising one. The new system would allow a bigger number of small investors to gain access to the stock market. He pointed out that the QSE has the potential to implement this system, adding that one of the system's advantages is reducing the risk of investors in the event of a decline in share prices.
He said there was a need to educate investors on the new system, as some could be led to believe that the value of their holdings will decrease, but that is not true. This is because the total number of shares held will increase, making up for the decline in per share value and leaving the total value of holdings unchanged.
The Acting Manager of securities & IPO Listing Affairs at Qatar Financial Market Authority (QFMA) said the new system would help increase the value and volume of shares traded and it would also help investors who hold stocks for long periods to overcome this and stimulate them to trade even a fraction of those shares after their split. He stressed that the system would also allow the investors to diversify their portfolios. He said that the reason behind the introduction of the new system was the desire to introduce new capital on the stock exchange and attract new investors to it, explaining that the decision to reduce face values is mandatory for all 45 companies listed on the Qatar Stock Exchange. He noted that the stock exchange has established a committee that would raise awareness among investors on how the new system will work. Qatar Stock Exchange's Samer Abo Ghazla said that the new system would divide the face value to QR1 a share, down from QR10 a share. He added that this means that any investor who has a share with a face value of QR10 will get 10 shares in the new system, a 10-1 stock split. He noted that there were three main goals behind establishing the system. The first was increasing the breadth of the market, the second was increasing liquidity, and the third was attracting new investors. He added that the number of investors in the stock market has reached 1mn.
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