Qatar considers privatizing its stock exchange, adding a new Energy index

The following is the only English-language translation of an exclusive interview of Qatar Stock Exchange CEO Rashid Al-Mansoori, by the Qatari Arabic language daily Al-Sharq. This article is not a word-for-word translation, but is a summary of the key points from the expansive interview, with some Arab Insider context added where needed.

Qatar unceremoniously announced that it is considering privatizing its stock exchange during an interview conducted by Al-Sharq daily with Qatar Stock Exchange (QSE) CEO Rashed Al-Mansoori. The CEO explained that privatizing the QSE will help ensure a regular schedule of IPOs which in turn would increase trading activity and liquidity as well as offer investors greater opportunities. This in itself is certainly not unprecedented, as Kuwait privatized its stock exchange in 2012, becoming the second publicly traded Gulf Arab stock, after the Dubai Financial Market.

Qatar Stock Exchange CEO Rashid Al-Mansoori
QSE CEO Rashid Al-Mansoori

The QSE is currently lists only 46 companies, and yet is the second biggest stock exchange in the Middle East with a market capitalization of $142 billion as of August 2018, the first being Saudi Arabia’s Tadawul – which has a market capitalization of $451 billion, as of July 2018. Dubai meanwhile, trails behind both with a market cap of approximately $107 billion in 2017.

The QSE is also considering adding a new Energy index in 2019, although the CEO offers no further details, and the Al-Sharq journalist fails to follow up. This is particularly interesting as Qatar announced in March 2019 the rather preemptive launch of the “world’s first Islamic Energy bank”, with a targeted capital of $10 billion that aims to finance domestic and global projects. Although officials at the press conference could not provide any clarifications when pressed by Reuters journalist Eric Knecht

The Islamic Energy Bank press conference launch on 19 March 2019

In addition to the Energy index, the QSE is also studying the inclusion of a new Islamic finance index, as well as a gold index – without giving any more information on either. Al-Mansoori also stated that the QSE is looking into listing REITs and are working closely with real estate companies as investors, according to him, are looking for no less than a 7% return. This would of course prove challenging in the Qatari real estate market,which is arguably the sector that has been hit the hardest as a result of Qatar’s embargo. This comes on top of an ever-increasing supply and waning demand that has driven rental prices down. 

According to the Al-Mansoori, international investors own 11% of the shares traded on the QSE, yet make up an impressive 45% of the trading. This comes as an side-effect of the political blockade of Qatar by its neighbors, after which Qatar enacted several key reforms regarding foreign ownership and investment, allowing international investors to own up to 100%of Qatar-based entities. 

The effect of these reforms, as well as several government-wide initiatives, regardless of how characteristically disjointed and uncoordinated they may be, will only be seen in the coming years. One thing is for certain though, Qatar’s embargo could turn out to be the best thing that ever happened to the small peninsula.

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