Qatar stocks rise amid steps to raise foreign ownership caps

14/03/2018 06:10 AST

Qatar’s main index posted its best two-day performance since December 2014 as two benchmark heavyweights prepare to raise the limit foreigners can own of their stock, a step that could lead to millions of dollars in inflows from investors tracking emerging markets equities. The QE Index gained 1.6 percent in Doha yesterday, bringing its gains for the past two sessions to 6.7 percent. Industries Qatar QSC advanced 4.6 percent after saying it’s increasing foreign ownership limit to 49 percent from 25 percent.

Qatar National Bank QPSC, which said a day earlier that it’s seeking shareholders approval for a similar change, rose 6.9 percent. Both stocks, which together represent about a third of Qatar’s main index, rose 10 percent on Monday, powering the benchmark to its best performance since 2016. QNB’s weighting in emerging market benchmarks compiled by MSCI Inc. and FTSE Russell could increase considerably with the higher cap for foreigners, and spur passive inflows of at least $730m, according to analysts at Arqaam Capital Ltd. and EFG-Hermes Holding. Amwall LLC, an asset management firm in Doha, sees a higher weighting as beneficial in keeping Qatar on the radar with emerging markets investors.

Arqaam Capital analysts Michael Malkoun, Jaap Meijer and Janany Vemadeva wrote in a report that the bank is seen as having “the most resilient business model” in the country. A cap of 49% could attract $867 million in passive flows for QNB and about $185 million for Industries Qatar, according to Mohamad Al Hajj, strategist at EFG-Hermes

“The move protects Qatar’s weight as a whole on both MSCI and FTSE EM indexes,” said Rami Jamal, a portfolio manager at Amwall LLC in Doha.

The Peninsula