GCC, Mena firms listing on QE likely

25/02/2015 07:10 AST

Driven by Qatar Exchange’s (QE) three-phase development programme to make Qatar an attractive investment destination for global fund managers, the bourse is likely to see companies from the GCC and Mena region listing on it.

Dual listing of companies and products are under discussion. QE is expected to introduce securities lending and borrowing, margin trading and central counterparty in order to attract foreign investors and improve operational efficiency. The regulator, Qatar Financial Markets Authority (QFMRA), has set the guidelines for investors looking to undertake margin trading on the local bourse, the Qatar-focused Qatar Investment Fund (QIF), noted yesterday citing reports.

The QIF, which had 25 holdings at the end of December 2014 (21 in Qatar, 3 in UAE and 1 in Oman) said it remains focused on Qatar because of an encouraging economic growth coupled with infrastructure spending. Robust earnings potential and attractive dividend yields of selected Qatari companies remain key drivers behind the heavy Qatar exposure.

QIF said it is bullish on Qatar’s Banking and Financial services stocks going forward. Banking and financial services sector net income rose 12.4 percent in the first 9 months of 2014, compared to a year ago. The trend is expected to continue, as infrastructure spending could keep supporting the lending growth. The sector heavyweight, Qatar National Bank posted the highest growth rate of 15.9 percent during that period.

Industrials sector profits improved by 3.5 percent during the first 9 months of 2014, compared with the first 9 months of 2013. The sector continues to remain the second largest contributor of total profits among all the Qatari listed companies. The real estate sector continued to post healthy earnings growth, as its net profit increased by 37.5 percent during the period. The largest contributor of profits, Ezdan Holdings, posted a 41.4 percent rise in its earnings growth during the period, mainly on the back of a strong rise achieved by the company’s rental income.

QIF’s Investment Adviser remains focused on Qatar because encouraging economic growth coupled with infrastructure spending. Robust earnings potential and attractive dividend yields of selected Qatari companies remain key drivers behind the heavy Qatar exposure.

QIF remains positive on Qatari banking because the infrastructure development plans announced by the government are expected to support lending activity, from which domestic banks will benefit. The company’s banking and financial sector weighting rose from 41 percent in Q32014 to 52 percent in Q42014. Qatar National Bank remains QIF’s largest holding at 17.7 percent of net asset value, followed by Commercial Bank of Qatar at 9.4 percent.

Nicholas Wilson, chairman of QIF said: “The Qatar Exchange was the only market to achieve a positive return during the six-months ending December 31, 2014 with the Gulf Cooperation Council exchanges falling by an average of 5.5 percent. Qatar’s positive performance in the face of sharply falling hydrocarbon prices was due to continuing diversification of the economy, with infrastructure contract awards and foreign inflows”.

The Peninsula