DOHA: Qatar’s ongoing strategies to transform the competitive dynamics of the country’s capital market is set to expand the role of the local market in financing business ventures, widening ownership of assets and generate returns on long-term savings.
In this free-wheeling interview to the Arabic business daily Lusail, published today, Qatar Stock Exchange (QSE) Chief Executive Officer (CEO) Rashid bin Ali Al Mansoori (pictured) shares his vision how QSE is set to transform itself as one of the leading bourses in the region. Following is the translated version of the interview:
Rashid bin Ali Al Mansoori, CEO of the Qatar Stock Exchange (QSE) has said the bourse is in the process of listing several companies in the coming years. In fact, the QSE has prepared a list of 35 companies that are expected to be listed for the next five years, he said.
He said that three companies are expected to be listed during this year. Nearly nine companies are expected to increase their foreign ownership upto 49 percent.
Qatar Stock Exchange was able to overcome impact of blockade in few days, said Al Mansoori adding that foreign stock exchanges knew very well the value of Qatari economy which was demonstrated by strong trading in previous months.
He said that despite exiting of three stock holders of blockading countries from Qatari market, more than 100 stockholders and investors from all over the world entered the market.
When asked about what happened to Qatar Stock Exchange at the beginning of blockade and how it reacted over the exiting of GCC financial institutions he said, on the first day of blockade, we were shocked because we did not expect a blockade to be imposed by a brother on his brother.
We witnessed what usually happens in such situation as the market was shocked in the beginning but from second day onwards we overcame the blockade very fast. And there were many reason for this, the biggest reasons included that Qatar Stock Exchange is the biggest emerging market in the region listed at the global index and second biggest market in term of the capital market.
Such international index that Qatar Stock Exchange is enjoying is tantamount to a sort of flexibility and resistance for any shock due to international weight, said Al Mansoori.
Other factors that helped Qatar Stock Exchange to cope up with the impact of blockade are trust of local and international investors in the national economy that proved its ability globally in the economic and political index and its pretty good growth even during the blockade, he added.
Regarding the movements of GCC fund in the first week of blockade, he said the exchange saw proportionally high liquidity by a funds. Actually, there was a fund from a blockading country that tried to bring negative impact on Qatar Stock Exchange.
And this fund was tracked clearly pumping money intentionally to create negative impact on the market. We have advanced technology to track such unusual trading. He said the bourse acted quickly to thwart the attempt to disrupt the market.
We the management of Qatar Stock Exchange believe in transparency and free trading because of the trust of local and international investors in the Stock Exchange of Qatar and its economy. So we left the market to trade naturally for the time being. We noticed huge increase of liquidity at the beginning of the blockade that reached an average QR400m to QR500m in a trading session from QR200m to QR250m before the siege in a session.
We saw that the investors specially the international index did not affect only some portfolios and institutions from blockading countries exited from the market.
However, remaining shareholders from GCC countries were trading comfortably like Qataris.
The money that was pulled out from Qatar Stock Exchange during those days was little – not more than from QR350 to QR400m and failed to make any impact on stock exchange due its large size.
Pretty good number of foreign companies entered the market after the blockade as they know very well about value and power of Qatari Economy and Qatar Stock Exchange. To recall, entire market was affected by the falling prices of petrol. Now the index returned to its natural level but we expect more improvement because actually the current trading value does not reflect the real value of Qatari market.
Now we need new listings that offer shares to foreign investors, help them to enter the market by increasing percentage of shares for foreigners. In addition, to activate the tools offered by Qatar Stock Exchange to the market like margin trading, market maker and index funds to ensure that our strategies continue and unaffected by blockade.
We have strong cooperation with GCC stock exchanges and there is The Arab Federation of Exchanges (AFE) and we have cooperation with our brothers there. The meetings with them were suspended due to current situation that hindered the interaction.
But as we noticed that Qatar Stock Exchange has strategy and reacted accordingly. So you found we added new products during the blockade, like index fun and new mechanism. Few days ago, we successfully added index fund of Al Rayan Bank that is considered the biggest one in the world. And launched some products like margin trading and liquidity provider.
Since the beginning of the blockade, we held many meetings with investors and companies in Qatar and abroad, even if two or three funds exited since the blockade we enabled to open accounts of more than 100 new funds and investors.
The number of new investors are growing and we are receiving investors weekly from all over the world; Asia, Europe, America. But still we are needed to support the stock exchange through new listings that we considered real fuel for the market.
About the new listings he said three new companies applied for listing during this year. At least one of them is expected to be listed during first half of this year but we expect more as our technical capability can accommodate more listing companies.
In the same context, through an initiative launched by Qatar Stock Exchange, we made a list of a number of companies that can be listed. The list includes 35 companies that would bring strength to Qatar Stock Exchange once they will be listed. The list is an initiative of Qatar Stock Exchange to help list these companies during next five years. The list includes the company from various sectors for diversification.
Qatari Market is able to accommodate listing a company on monthly basis and this drive our attention towards a very important issue; the mechanism of listing and easing its procedures. We should get rid of bureaucracy in Qatari Market as we found the world is switching to online listing.
The law of 20th century would not keep pace with 21st Century so we should make smart law and be flexible and able to attract the investments and to ease the listing procedures. In some countries, listing does not take more than a week.
The Stock Exchange should be given more power to help speed up in listing and licensing. Qatar Stock Exchange is currently working to launch more ETFs as it is one of the most important products that are popular among local and foreign investors.
We are currently developing the services, laws and activating the single window mechanism for listing, developing the licensing mechanism for intermediaries in cooperation with Qatar Financial Markets Authority.
In order to offer services in single window for the investors, to serve them fast and to connect through modern technology, we are currently trying to provide the state-of-the-art technology.
When we look at other institutions in Qatar, such as the Ministry of the Interior and the implementation of Metrash, we find many services available through the application in an easy and secure way, although the information and services provided by the application is larger in size and more sensitive, yet progress in such advanced framework is smooth and easy.
So why we do not use the same system to simplify the process of listing of companies so that the process takes only months or even a few weeks instead of years.
If the information concerning the company wishing to list on the Stock Exchange is complete and fulfill all requirements, then there is no reason to reject the listing. There are some countries in the region where direct listing the companies is allowed if the number of investors reaches a certain level such as 100 investors for example and fulfill all requirements.
He urged all stakeholders to simplify trading procedures the call of simplifying procedures is directed to all parties involved in the Qatari capital market who are responsible for supporting this transformation, including the Qatar Exchange itself, and cooperation is required among all those parties to achieve this on the ground.
Now we have started initiatives through the Market Development Committee and we will soon find solutions for such ideas that find strong cooperation and welcome.
When asked about low presence of shareholders in the meeting of general assembly meetings of some listed companies in addition to the weak discussion he said, listed companies are committed to disclosure and transparency procedures and to invite all shareholders to attend. It is necessary for the Assembly to achieve a quorum, which is sometimes done through delegations.
The Qatar Exchange has an educational program at all levels, both at the corporate level and investor relations. We also have programs to educate schools, universities and individual investors, and thousands benefit each year from stock exchange programs for training and education.
When asked about the cash dividends distributed by listed companies for 2017 he said, the distributions came within the continuous direction of the Qatari companies, which are usually generous with their investors and their financial position and their huge capabilities are making them to offer huge dividends.
Qatar is now a global economic center, being the largest exporter of liquid natural gas, and Qatari companies benefit from all these political and economic capabilities.
In a message to retail investors he said, Qatari stock market is based on a strong economy characterized by high growth rates and sustainable development, and our financial market is one of the best international markets and the largest market in the Middle East within the index of MSCI, and the next is best. My second advice to them is to enter the market with knowledge and awareness and study the companies.
Sharing his thoughts on why some companies are still trading below the listing price, he said, there is no market in the world where all companies are equal, and this is the nature of the stock exchange, which is not always on a continuous rise or decline and fluctuation in the market is a positive thing, because the investor must see this fluctuation to exploit opportunities.
He said that there are companies that have to raise the rates of foreign ownership to stay within the global indices, and recently we found a number of companies that have been directed to this recently, and we are encouraging all companies to do so, currently we are working on 7-9 companies that intend to raise ownership of foreigners.
On the performance of Qatari stocks listed in global indices, especially with the news of the entry of more markets in the region for these indicators, and the possibility of deducting part of the weight of the investment of Qatari companies, Al Mansoori said: “We are currently working on supporting the Qatari stock exchange by raising foreign ownership ratios to 49 percent, secondly increasing the percentage of individuals’ ownership and thirdly increasing the turnover rate by activating the mechanism of liquidity provider and eliminating any restrictions or laws restricting foreign investment and facilitating opening the accounts and fifth promotion of the Qatari market and this is the role of the Qatar Exchange.”
When asked why do we find this discrepancy between trading values of the two ETFs on QSE, he said these funds need more marketing, which has not happened yet, because there are financial institutions in Asian countries such as Malaysia, Indonesia and even in Europe want to invest in index funds, especially the Islamic funds that are popular in those countries.
In April we will visit some countries to meet some investors to promote in Asia and Europe.
We have continued cooperation with the Qatar Financial Markets Authority (QFMA) about the “Single Window System”, which has greatly facilitated listing of companies. There is already discussion going on in this regard within the Ministry of Finance, Ministry of Economy and Commerce, Qatar Financial Markets Authority, Qatar Central Bank, Qatar Financial Centre and Qatar Stock Exchange.
This committee, in its regular meetings, discusses important topics and initiatives related to the development of the market. They are already serious about pushing forward and we are continuously cooperating with them. The Qatar Stock Exchange has an important role in developing the market.
When asked about the most prominent markets targeted by the Qatar Stock Exchange during the next phase in order to attract more investments he said, the Qatar Stock Exchange contributes significantly to the development of the Qatari market and attract investors through visits, conferences and discussions with major funds.
We now have a strong trend towards Asia, which is one of the most important markets because of the strong opportunities there which we can benefit from, but they have some restrictions on the transfer of capital from their countries, which we are currently seeking to find solutions. We have great cooperation with them in this area. There is also direct cooperation with stock exchanges around the world and exchange of experiences.
The Qatar Stock Exchange looks to do its part and see the strong cooperation of all those who play a big role in attracting foreign investment to Qatar.
All listings entered the stock exchange have been studied carefully, especially with regard to the readiness of these companies for listing, and there is no notes from the concerned authorities regarding the companies which get approve to be listed.
The listings related to companies which can be privatized is very important for the market, because if we look back to the time of listing the company of “Mesaieed” we found that the average trading jumped to QR860m per day, and index reached to a high level of 12,640 points.
Therefore, if we include such companies, the market can again return to activity both in terms of trades or performance indicators, and Qatar Petroleum promised to list a group of companies during a specific period after Mesaieed and we are waiting for these listings.
It is up to Qatar Petroleum, but we in the Qatar Stock Exchange encourage it, because if we look at some of the neighboring countries, one of them listed 16 companies in one year, while the Qatar Stock Exchange has not listed a major company for a long time.
The companies that will be listed this year are mostly family owned, and it is good and we encourages it because it is important for family companies to list in the Qatar Stock Exchange, which is the best way to ensure continuity, sustainability and capital development.
Most of the new companies which will be listed are industrial companies, and we want to see at a minimum to see 6-7 listings annually.
The amount of trading currently at Qatar Stock Exchange does not reflect the reality of the Qatari economy, because to achieve this, the trading should not be less than QR1bn per day, because it the second largest market in the region.
To achieve this, we need two things, first is the a specified and clear schedule for privatization and listing and the second is to develop laws to attract investment, but to continue for years without a listing is not positive in terms of activating the market and support the values of trading.
When asked about the volume of trading despite the launch of the margin trading he said, the reason is the brokerage companies. Despite the launch of the initiative for a while, we still have only one brokerage company benefitting from this service which is The Group.
Therefore we encourage intermediaries always to develop their services and exploit these new mechanisms, and not only rely on to buy and sell shares, They should develop their services in cooperation with the QSE and Qatar Financial Markets Authority.
