The Qatari stock market could attract up to $3.5 billion in passive fund inflows if Doha goes ahead with a plan to consolidate all local shares held by its pension funds and sovereign wealth funds, according to Dubai-based Arqaam Capital Limited.
The $450 billion Qatar Investment Authority and the General Retirement and Social Security Authority are considering a proposal to merge their $3 billion local equity holdings into a separate entity, in a bid to attract interest from foreign investors and deepen the market, Bloomberg News reported. Yesterday Tuesday.
Qatar is considering increasing stock trading on the stock exchange to attract foreign investors
The new entity will employ funds from third parties to actively manage and trade the shares, thus boosting the activity of the market as a whole, according to people familiar with the matter, who asked not to be identified because the information is not public.
Such a move could attract an estimated $2.46 billion in inflows from MSCI trackers and $1 billion from FTSE trackers, if the two entities release all of their shares and make them freely traded, the analysts wrote in numbers. Capital, Yap Major, and Elijah Shaar, in a note on Wednesday.
The two analysts said that if the Qatar Investment Authority added 5% of its local shares to free float, the stock market could attract at least $587 million in inflows. They added that Qatar National Bank, Industries Qatar and Qatar Islamic Bank would likely be the biggest beneficiaries.
The main Qatar Stock Exchange index rose more than 2% today, Wednesday, supported by the gains of Qatar National Bank, Qatar Islamic Bank, Qatar International Islamic Bank and Commercial Bank of Qatar, all of which are on the MSCI-Qatar index.
Saudi experience
Ahmed Al-Dafrawi, Head of Data and Index Research at EFG-Hermes, indicated that Qatari stocks may attract about $1.8 billion of passive inflows that invest in MSCI and FTSE index funds, if the Qatar Investment Authority sells 20% of its holdings of local stocks. . And he wrote in a note today, Wednesday, that it is expected that Qatar Islamic Bank, Qatar National Bank, Ooredoo, Masraf Al Rayan and Commercial Bank of Qatar will benefit from this step.
The informed people indicated that Qatar is studying the plan in the hope that increased trading volumes will lead to higher returns on investment, reduce costs, and help diversify investments, adding that changes may occur in this regard by the end of the year, but a final decision has not been made yet.
If Qatar decides to go ahead with this plan, it will follow the example of Saudi Arabia, which increased the total free float shares in 2021, after raising $29 billion in domestic and foreign shares from the Public Pension Agency and the General Organization for Social Insurance. As a result of these changes and the sale of a stake by the Public Investment Fund (the kingdom's sovereign wealth fund), Saudi Arabia received at least $815 million in passive fund inflows, according to an estimate from EFG-Hermes.
