Qatari stocks jump on plan to allow full foreign ownership

Satyendra Pathak Doha Qatar’s stock market registered its biggest intraday gain in more than a year on Thursday after Cabinet approved a draft law allowing...

Satyendra PathakDohaQatar’s stock market registered its biggest intraday gain in more than a year on Thursday after Cabinet approved a draft law allowing foreign investors to own up to 100 percent in Qatari shareholding companies listed on the Qatar Stock Exchange.Outperforming regional peers, the Qatar Stock Exchange (QSE) general index jumped 293.68 points, or 2.8 percent, to close at 10,899.06 points.Once the law is implemented, listed companies will have to individually approve the increased limit.According to estimates by investment bank EFG-Hermes, the decision could trigger inflows of about $1.5 billion into Qatar’s listed companies. “Stocks that could benefit the most include Qatar Islamic Bank, Masraf Al Rayan and the Commercial Bank of Qatar,” the investment bank said.Qatar Islamic Bank leapt 8.3 percent, while Commercial Bank surged 10 percent to become the top gainer on the index. Qatar International Islamic Bank, Masraf Al Rayan and Al Khalij Commercial Bank shares climbed 5.6 percent, 5.52 percent 3.67 percent respectively.The Cabinet also decided to keep central bank liquidity support for local banks based on need as the country braves a second wave of coronavirus infections.The banking sector index, which gained 3.1 percent, was the best performing sector index on the day that saw QSE market capitalisation rise almost QR8 billion to QR627 billion.“This proposal is another milestone on the path to liberalising the economy, with Qatar setting the foreign ownership standard for the region,” Akber Khan, senior director of asset management at Al Rayan Investment in Doha, was quoted as saying by a news agency.Announcement of extension of pandemic-prompted financial support for private businesses also triggered optimism in the Qatari market.“With the loan-deferral programme extending further, businesses will have more time to improve cash flow before lenders assess the ability of customers to pay down deferred dues and it allows for more loan restructuring,” an analyst said.According to an estimate by QNB Financial Services (QNBFS), foreign institutions closed the trading week on Thursday with net buying of QR414 million against net buying of QR48 million in the previous week.Qatar’s move to allow foreign investors to own up to 100 percent in Qatari shareholding companies follows similar decisions by other Gulf countries as they seek to attract inflows from abroad.In 2019, the United Arab Emirates said it would allow foreigners to own 100 percent of businesses across industries and Saudi Arabia removed a cap on ownership of publicly traded companies for foreign strategic investors.