Global index complier FTSE Russell's reclassification of shares listed on the Qatar Stock Exchange (QSE) is expected to see "significant" trading on those reclassified constituents, according to the local bourse.
FTSE had last week announced reclassification of Qatar constituents, effective from September 19, 2019. Accordingly, Woqod will come under large cap segment instead of midcap, while Barwa Real Estate will find its place under midcap against the existing large cap classification.
Al Meera Consumer Goods will come under small cap segment instead of the present classification under midcap.
Salam International Investments and Qatar Oman Investment have found their places within the index compiler's microcap segment.
"As a result of the periodic review process, the reclassified, added companies usually witness significant activity on their shares," the bourse said in a statement.
The companies’ inclusion and reclassification in global indices are subject to various criteria, the most important of which are the size of the company's investable capital and market capitalisation, liquidity and turnover rates.
Periodic index reviews, including companies’ reclassifications, additions and deletions, carried out by international index providers are among the main factors influencing the investment appetite of international investors and portfolio managers.
QSE is seen actively pursuing a strategy to lure investments from China, Hong Kong, Singapore and other Asian countries as part further diversifying its investor base, having put in place the required legislation, including a higher up to 49% foreign ownership limit (FOL).
Many companies have already enhanced FOL up to 49% and the Qatar Central Securities Depository (QCSD) has amended the FOL in this regard. So far this year has seen QCSD approve enhancing FOLs (to 49%) in Industries Qatar, Gulf International Services, Mesaieed Petrochemical Holding, Qatar Electricity and Water (QP subsidiaries), Qatar Islamic Bank, Barwa, Woqod, QNB and Qatari Investors Group.
After Qatar's upgrade to emerging market status by the international index compilers as MSCI, Standard and Poor's Dow Jones and FTSE Russell; the domestic stock market witnessed passive foreign funds inflow but was not that substantial in view of the restrictions on FOL at that time. Hence, through an Amiri decree, the FOLs were enhanced up to 49%, the move which ought to strengthen the international funds inflow.
In its latest 218 annual report, the bourse said it has become a focus of interest for many foreign investment portfolios from the US, Europe and Asia, and therefore has readied its infrastructure and technical to admit new companies and instruments.
The FOL increase has strengthened the position of the Qatari companies listed on MSCI and S&P emerging markets indices and the FTSE Russell secondary emerging market index.