Cabinet nod up to 100% FOL in four major banks to drive more overseas funds: QSE

The Qatar Stock Exchange (QSE), which is eyeing developed market status from the global index compilers, expects robust investment inflows into the listed companies after the cabinet allowed up to 100% foreign ownership limit (FOL) in four major banks.

“We value and welcome the cabinet’s approval of increasing the percentage of FOL in (four) local banks to 100%, and this will contribute to increasing investment flows in listed Qatari companies,” QSE chief executive Rashid bin Ali al-Mansoori said in a tweet.


The cabinet meeting, chaired by Prime Minister HE Sheikh Khalid bin Khalifa bin Abdulaziz al-Thani, had approved QNB, Qatar Islamic Bank, Commercial Bank, and Masraf Al Rayan for enhancing the FOL up to 100%. These four banks together constitute more than 43% of the total market capitalization as of August 24, 2021.

The approval has to be taken up before the shareholders at the extraordinary general assembly meeting to amend the Articles of Association.

“The decision is expected to enhance the country’s economic activity and attract overseas funds in efforts to diversify the economy,” al-Mansoori said, adding it will help attract more investments in the banking sector, which is already robust and profitable.

Qatari banks ranked first in the Arab world in terms of profit indicators, he said, quoting the Arab Monetary Fund.
The banks and financial services sector, which has 13 listed entities, reported 12.66% year-on-year growth in cumulative net profit to QR12.7bn against an 8.04% fall in the comparable period of 2020.

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The sector contributed about 62% of the total net profits of the listed companies in January-June 2021.
Market sources also said higher FOL would ensure higher weights in the emerging markets of the global indices, which in turn, means new money from international funds to match the new weight.

The indices calculate the weight of each company based on the percentage ownership available to investors (local, regional and international).
Stressing that QSE will maintain its leadership position in the region by attracting global capital into its financial markets; al-Mansoori had said earlier that the bourse’s strategy has been to continue to increase Qatar’s weight in the MSCI emerging markets index by increasing the foreign ownership levels and liquidity of the listed companies.

The sources said eased foreign entry has been one of the preconditions to get an upgrade to the developed market status from the global index compilers.
Earlier this year, al-Mansoori had said the QSE is striving for the developed market status from the present emerging market status.

“We have an active program in place to address shortcomings in our market infrastructure as identified by the global index compilers,” he had said.
Courtesy: Gulf Times

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