The Qatar Stock Exchange (QSE) is hopeful of making it to the "developed" market category from the present "emerging" market status, having consistently upgraded its product and legislative framework.
This expectation was aired by QSE chief executive Rashid bin Ali al-Mansoori, after the Qatar Financial Market Authority (QFMA) approved amendments of the QSE Rulebook relating to market makers, liquidity providers and disclosure of financial and non-financial statements for companies listed on the QSE through the unified electronic disclosure system.
"All these and other initiatives aim to raise Qatar's rating from an emerging market to an advanced market that attracts investments," said al-Mansoori, who has been echoing this view since 2016.
Market sources said from a regulatory certainty and the country’s macroeconomic perspectives, the QSE has necessary grounds for becoming developed market status but more is needed to ensure "sufficient" conditions are met.
The omnibus account, introduction of derivatives and multi-currency accounts and allowing of foreign brokers as well as booking building in the primary market, apart from further deepening and broadening of the market, which are now in the various stages of development should make the QSE into "developed" market status in the future.
They said the steady pace of reforms and the global investors' penchant for strong potential has rather masked the geopolitical risks relating to the local bourse.
The QSE has become a focus of interest for many foreign investment portfolios from the US, Europe and Asia and it has readied its infrastructure to admit new firms and instruments.
The foreign ownership limit 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.
In October last year, it introduced margin trading, which allows investors to borrow money from a broker purchase stocks. The bourse has already introduced liquidity provision.
The QSE, which was the first bourse in the region to introduce delivery-versus-payment system, by which payments take place simultaneously with deliveries, is also making environment social governance (ESG) reporting mandatory for the listed companies.
The QSE is among the first stock exchanges in the world to encourage transparency and disclosure by promoting digitalisation of ESG data. It is now in the process of developing a sustainability benchmark index for the listed companies as the country has promising potential to be a niche ESG market in the region.
Finding that investors worldwide are increasingly incorporating sustainability factors into their investment decisions, the QSE is convinced that companies that effectively communicate their sustainability strategies will improve their capital raising abilities and have an overall competitive advantage.
The QSE-listed stocks became a more attractive proposition for foreign investors following the introduction of responsible investment mandates, with ESG reporting soon becoming mandatory for all listings, said a joint report of the Qatar Financial Center and Refinitiv.