The country has made great strides in capital market development, increasingly attracting international investors to its growing equity market and encouraging regular local bond and Sukuk issuances.
Qatar Financial Centre (QFC) and its regulator have played an integral part in this journey, working together with the Qatar Central Bank (QCB) and Qatar Financial Markets Authority (QFMA) to ensure regulatory alignment and the effortless execution of national financial development priorities.
Qatar is the region’s second-largest equity market with a market capitalisation of $160bn from 47 listed companies by the end of 2019. The government and Qatar Stock Exchange (QSE) have taken several measures, foremost among them increasing foreign ownership limits, to make the market even more attractive to foreign investors following its inclusion in the MSCI Emerging Market Index. Bond and Sukuk issuance in Qatar totalled $28bn in 2019, representing a CAGR of 28 percent since 2015.
Growth in 2019 was largely driven by conventional bonds, which made up 83 percent of total issuance, and particularly sovereign bonds, which included the successful issue of a $12bn international jumbo bond in March 2019.
Sukuk issuance grew by a moderate CAGR of 6 percent from 2015, despite continued issuance from both government and corporates. Government issuance has been the main driver of Sukuk activity in Qatar, but sovereign Sukuk remain limited to the domestic market as the geopolitical landscape in the region hampered demand from GCC-based Islamic financial institutions – a huge source of global Sukuk demand. International issuance accounted for 60 percent of total bond and Sukuk issued by Qatar entities since 2015, the majority (57 percent) of which USD-denominated.
Other international issuances during this period targeted Asian investors, including Chinese yuan and Japanese yen. Qatar’s solid credit rating, strong investor demand and inclusion in benchmark emerging bond indices present sizeable opportunities for new corporate issuers other than financial institutions. QSE has been active in raising awareness among small business owners and family-owned companies of the advantages of listing on its market. IPOs offer businesses an alternative funding channel that has several advantages, such as granting management more flexibility in running its operations. It offers long-term financing with no payout obligation, and investors can be called upon for further funding through rights issues.
Qatar is on the path to developing deeper and more diversified capital markets, backed by the QFMA and the QFC Regulatory Authority, which have issued rules preparing for the governance and offerings of existing and new financial investments in the country
