With stock purchases becoming easier at lesser price, Qatar's equity landscape is set to see enhanced liquidity, thus helping retail investors expand their portfolio, and also offering an attractive option for foreign investment funds.
Moreover, certain underlying stocks are expected to generate higher demand, which is also expected to enhance the global appeal of the Qatar Stock Exchange, which now has the emerging status according to various global index compilers.
Companies listed on the Qatar Stock Exchange have been implementing the stock split, through which the nominal value of a share has become QR1 per share instead of the earlier QR10.
The stock split results in enhanced free float, thereby increasing liquidity, but leaving the paid-up capital intact. Shareholders do not need to take any action because of the stock split, which will not affect the company’s market capitalisation, or the proportionate ownership of existing shareholders.
"The idea (behind the stock split) is to make the scrip affordable. It is also boon to such companies that have seen sharp increases in their share value," an analyst with a leading bank brokerage told Gulf Times.
He said the higher float brought about by increased share base will guide the market forces to gauge the right intrinsic value of the stock.
"The stock split will gauge the right intrinsic value as more float will help market forces to determine true price," an analyst with a leading investment firm said.
However, he highlighted that empirical studies suggest that post stock split, share prices have exhibited a chequered path in many global markets.
"The stock split may not have its reflection in terms of wealth effect but it will have an impact on liquidity," the analyst said, adding the actual effects of stock split are expected to trickle down more after the summer holidays.
So far, Commercial Bank, Qatar First Bank, Al Khaliji, Dlala Holding, Qatar Oman Investment, QIIB, Alijarah Holding, QNB, Ahlibank Qatar, Islamic Holding, Qatar Islamic Bank, Doha Bank, Masraf Al Rayan, Al Meera Consumer Goods, Mannai Corporation, Widam Food, Zad Holding and Qatari German Company for Medical Devices have implemented the stock split.
The stock split and higher foreign ownership limits would spruce up the country's capital market in the days to come, sources said.
The QSE-listed companies have held extraordinary meetings of their general assemblies, in parallel with their ordinary annual meetings, in order to amend their articles of association in preparation for the enforcement of stock split.