HH the Emir approves increase in foreign ownership limits for stock listed on Qatar Exchange
In a continuing bid to reform and develop the Qatar Exchange, a formal law has been issued raising foreign ownership limits on listed companies to 49 percent.
The law was first announced in May of this year before Qatar was upgraded on the MSCI Index from Developing Market status to an Emerging Market. It was officially signed by HH the Emir Sheikh Tamim bin Hamad Al Thani in early August, and is expected to be implemented soon. Most companies trading on the exchange currently have foreign ownership limits (FOL) of around 25 percent, with some exceptions. The new rule will allow foreign ownership of up to 49 percent. Additionally, Gulf Cooperation Council (GCC) citizens will, for the purpose of trading, be treated as Qatari nationals. This will mean stakes owned by them will not count towards the foreign ownership.
However, HE Minister of Finance, Ali Sharif Al Emadi , who is also the secretary general of the Supreme Council For Economic Affairs and Investment, said in a QNA statement, “The non-Qatari citizens who are not members of the GCC may possess shares of the companies listed in QSE and by a percentage not exceeding 49 percent, and this will be up to the desire of each company through amending its statute.”
It is unclear as of yet if this will mean companies will be allowed to set limits below the 49 percent threshold. Vodafone Qatar’s chief financial officer, Steve Walters, told The Edge, “Whilst we are a 73 percent Qatari owned company, Vodafone Qatar has no foreign ownership restrictions.” Increasing the FOL can only be positive for the market and would be welcomed, he added.
The law was likely enacted as part of a number of steps the Exchange has made since it upgraded to Emerging Market along with the UAE. According to QNB Financial Services analysis, so far in 2014, there has been a net foreign portfolio investment inflow of USD2.1 billion (QAR7.6 billion). Foreign institutions remained bullish during the week of the announcement, according to QNB reports, with net buying of QAR143 million versus QAR98 million in the week prior. Walters said that several factors had led to the good performance of Vodafone share price over the past 12 months, including the period running up to the MSCI upgrade, where he said, the whole market benefited from the increased liquidity.
Qatar’s stock exchange is the second largest in the Middle East in terms of market cap, behind only Saudi Arabia which recently announced that from 2015, it would allow foreign investors into its previously closed-off stock market.
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