QSE announces methodology changes to QE Index

09/03/2017 07:36 AST

Qatar Stock Exchange (QSE) has announced that it has made changes to the methodology of the benchmark QE Index, following a decision by QSE Index Committee and the approval of the Qatar Financial Markets Authority (QFMA).

The decision by the Index Committee is aimed to enhance the tradability of the index and ensure that consistent liquidity is a determinant of index inclusion. The changes will be effective from April 2017, along with the periodical rebalancing of the index. According to the new changes, existing QE Index constituents must have recorded annualized share velocity greater than 5 percent during the final quarter of the 12-months review period.

For a stock to enter the QE Index it must have recorded annualized share velocity greater than 5 percent for each of the 4 quarters of the 12-months review period. The new changes stipulates that existing QE index constituents must have traded during at least 80 percent of the trading days during the final quarter of the 12 –moths review period. For a stock to enter the QE Index it must have traded at least 80 percent of the trading days of each of the 4 quarters of the 12-months review period.

QE index measures the 20 largest and most liquid stocks in the Qatar market. On the 1st day of April and October the index is rebalanced, determining whether existing constituents continue to fulfill index criteria. All listed companies are ranked by giving free float market capitalization a 50 percent weight (or consideration) and average daily value traded also 50 percent weight. Companies with velocity less than 5% are excluded from the review, as are companies whereby a single shareholder can only own less than 1 percent of outstanding shares.

Meanwhile, the Gulf Investment Group (GIG), a brokerage firm licensed in the Qatari market, yesterday launched a demo trading account for the shares listed on QSE. Attending the event,. Rashid Bin Ali Al-Mansoori, CEO of QSE urged the brokerage firms to take advantage of the new mechanisms introduced in the market such as the liquidity provision and margin trading. These services will help investors, brokers and listed companies boost market liquidity, he said.

The Peninsula