Qatar Exchange has submitted proposals to the government for higher limits on foreign ownership of listed stocks, which could encourage more companies to make initial public offers of their shares, the exchange's chief executive said. With a capitalisation of about $130 billion, Qatar's stock market is thinly traded compared to some other bourses in the region, such as those in the United Arab Emirates. Liquidity is too low to support much expansion of the market, which has 42 stocks; its last IPO was conducted in 2010.
This could change, however, if the country of 2.1 million people can attract more foreign money to its market. Inflows are expected to increase next May, when international equity index compiler MSCI has said it will upgrade Qatar to emerging market from frontier market status. "In the medium term, we believe increased exposure to international investment might be expected to lead to an increase in initial public offerings, thus potentially leading to a much-needed deepening of the equity market," said Rashid Bin Ali al-Mansoori.
He cited analysts' estimates that Qatar would obtain a weight of about 0.45 percentage point in MSCI's emerging markets index, which would cause global fund managers to funnel around $500 million to $1 billion of additional money to the market. "There are even higher estimates floating around. We have seen an increase in account-opening activities by international investors already," Mansoori said in an email interview for the Reuters Middle East Investment Summit.