Qatar Petroleum headquarters (Reuters)
DOHA: QP’s historic announcement to raise foreign ownership limit (FOL) in the energy sector companies and its subsidiaries listed on Qatar Stock Exchange (QSE) is a huge push to the local bourse’s ambitious strategy to increase liquidity in the market and attract more local and international investors.
The decision will help improve the breadth of the market and further improve liquidity.
The increase of the FOL is very positive for the Qatari market because it is an attempt to increase its exposure to the emerging market index. The increase in FOL will open up Qatar’s energy and banking system for more strategic foreign investors, market watchers told The Peninsula.
According to QP’s announcement, Qatar Electricity and Water Company (QEWC), Qatar Fuel (Woqod), Gulf International Services (GIS) and Mesaieed Petrochemical Holding Company (MPHC) will take the steps needed to approve the increase in the foreign ownership limit to 49 percent within the coming weeks.
QP’s announcement comes close on the heels of the market heavyweights Qatar (IQ) and QNB announced their respective intentions to increase their non-Qatari ownerships from 25 percent to 49 percent.
Market experts expect the rise in the foreign ownership cap will encourage foreign investors to channel more funds to the QSE, especially at a time when the government is accelerating spending on infrastructure. The decision will inject vigour to the QSE and encourage family-owned firms to go public, they said.
“QP’s decision strongly suggests the list of listed companies with increased FLOs is set to grow further”, Akber Khan, Senior Director-Asset Management, Al Rayan Investment Group told The Peninsula.
QSE is currently working on a long-term plan to ensure at least 35 companies are listed on the bourse in the next five years. Speaking to an Arabic daily last week, QSE Chief Executive Officer Rashid bin Ali Al
Mansoori said the bourse is expecting more companies to lift their FOL’s in the coming months.
The Qatari companies’ decisions to raise the cap of their FOL is followed by the issuance of the law (No.9/2014) that amended some provisions in the existing law regulating investment of non-Qatari capital in economic activity.
The effect of this change was to raise the limit of permissible foreign ownership levels in the listed companies to 49 percent, which previously was limited to 25 percent in most listed companies.
The newly approved law stipulates that non-Qatari investors are allowed to own up to 49 percent of the shares of a Qatari shareholding company listed on the QSE.
Currently, QSE has 43 listed companies and its market capitalization is valued at QR470bn at the end of March, 2018. Net buying by foreign investors stood at an estimated $20m in the past week.
