IQ set to increase foreign ownership limit to 49%
(3/14/2018 7:48:00 AM)
Market heavyweight Industries Qatar (IQ) has announced the increase of foreign ownership limit (FOL) to 49% from 25%, a move that will enthuse foreign funds to enhance their exposure in the country’s capital market.
“This decision comes in line with the vision of the Qatar Stock Exchange to enhance the Qatari stock market and develop its mechanisms to become a regional financial centre and capital market that attracts local and regional issuers and investors,” said a spokesman of IQ, which is the holding entity of Qatar Petrochemicals, Qatar Fertiliser and Qatar Steel.
The fact that FOL relaxation comes from a blue chip and an entity that has direct linkage with Qatar’s hydrocarbons signals the imminent expected changes in the foreign direct investment scene in the country and is positive for the market, sources said.
At the roadshows held in several financial hubs like New York and London during the previous years, fund managers had reportedly raised the issue of restrictive FOLs in certain selective underlying stocks.
QSE sources said they would not like to comment a specific company. However, they viewed that enhanced FOLs are expected to attract more investors, especially considering that Qatar is the fastest growing economy, despite the continuing illegal blockade, and holds promising potential for investors. IQ’s decision comes a day after the country’s largest lender QNB also announced a proposal to increase the FOL up to 49%. It also comes after Doha witnessed the advent of QETF, sponsored by Doha Bank.
Many listed companies, it is learnt, are in the process of enhancing the FOL in view of the upgrade by MSCI, Standard & Poor’s-Dow Jones and FTSE Russell.
So far, Islamic Holding Group, Nakilat, Milaha, Ezdan Real Estate, Commercial Bank, Aamal Company, Qatar General Insurance and Reinsurance and Doha Bank are among those received approval from the Qatar Central Securities Depository to enhance the FOL up to 49%.
An Emiri Decree in 2016 had allowed a higher foreign holding up to 49% of the capital in place of the previous limit of 25% after MSCI and Standard & Poor’s-Dow Jones upgraded the Qatari bourse to ‘emerging’ market from ‘frontier’ status.
The enhancement in FOL would help increase the weightage of Qatar within the international indices, thereby helping attract more overseas funds, market experts said.
Given the robust macroeconomic fundamentals, Qatar’s bourse has the potential for higher foreign funds inflow, considering that as much $200bn development expenditure is outlined in the short-to-medium term in the run up to 2022 FIFA World Cup.