Qatari stocks surged the most in a year after the country said it could allow foreign investors to fully own listed companies – a move that could trigger inflows of nearly $ 1.5 billion.
Qatari shares rose the most in a year after the country said it could allow foreign investors to fully own listed companies, a move that could trigger more than $ 1 billion in inflows abroad .
The cabinet approved a bill that will allow foreign investors to own up to 100% of listed companies, according to Qatar’s national news agency. If the law is implemented, companies would have to individually approve the increased limit.
Although implementation is yet to be confirmed, the move could trigger inflows of around $ 1.5 billion in listed companies that would gain greater representation in global benchmarks, according to estimates from the Bank of EFG-Hermes investment. The QE index gained 2.8% on Thursday, the highest level in over a year, to close at the highest level since January 14.
The stocks that could benefit the most are Qatar Islamic Bank SAQ, Masraf Al Rayan QSC and Commercial Bank of Qatar, the investment bank said. Their shares climbed 8.3%, 5.5% and 10% on Thursday, respectively, leading gains among members of the main gauge.
The gas-rich nation is following similar decisions made by other Gulf countries as they seek to attract inflows from abroad. In 2019, the UAE said it would allow foreigners to own 100% of businesses in all industries, and Saudi Arabia removed a cap on ownership of publicly traded companies for foreign strategic investors.
The proposal is “another important step on the path to liberalizing the economy, with Qatar setting the standard for foreign ownership for the region,” Akber Khan, senior director of asset management at Al Rayan Investment said at Doha.
The ministers also announced the extension of financial support to private companies due to a pandemic, in particular the extension of a guarantee program that allowed some companies to borrow money without interest to pay wages. and rents until the end of September. Restaurants, lounges and other leisure venues closed earlier this month as the country tightened restrictions to tackle a second wave of coronavirus.
“With the expansion of the loan deferral program, businesses will have more time to improve their cash flow before lenders assess clients’ ability to repay deferred contributions and this allows for greater loan restructuring.” , said Edmond Christou, analyst at Bloomberg Intelligence. Qatari banks have relatively low NPLs ratios, but first quarter profit data suggests they edged up slightly, he added.
(Updates with closing stock prices in the third paragraph, adds commentary and context to the seventh and eighth.)
–With the help of Walid Ahmed.