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Qatar fund steps in to up trading on Doha bourse

By Matt Smith
Qatar stock exchange Reuters/Naseem Zeitoon
The strategic options are still subject to completing the necessary financial, technical and legal assessments and regulatory approvals
  • Market making programme aims to boost share trading
  • Sovereign wealth fund to invest up to $274.7m
  • Stock exchange trading fell 3.5% last year

Qatar Investment Authority will provide up to QAR1 billion ($274.7 million) to fund a programme for the country’s stock exchange that it says will boost share trading, improve pricing and help attract more foreign investors.

Such market making programmes are pivotal to the functioning of many stock markets by guaranteeing they will always buy or sell the shares that other investors want to trade.

This means more trades can be completed, while market makers earn a profit on the spread between their buy and sell prices.

The QIA will bankroll the programme for the next five years, according to a bourse statement on Tuesday that says the initiative will provide rebates to established market makers to lower their trading costs.

“The permanent programme will help enhance liquidity in the market, improve price discovery, and diversify the capital markets in Qatar,” the statement said.

“Through increased investor confidence, the programme will attract further foreign asset managers to invest in Qatar.”

Although every company listed on Doha’s bourse allows up to 49 percent foreign ownership, and many can have full non-Qatari ownership, almost all stocks are far below these limits, data from the Qatar Stock Exchange shows.

Trading fell 3.5 percent last year to 45.4 billion shares, with volumes falling each quarter throughout 2022.

Only 25,699 transactions were completed on Monday, for example, despite the overall market capitalisation standing at $173.3 billion. 

Tuesday’s announcement follows reports last week that the QIA and Qatar’s state pension fund may consolidate some of their local stock holdings into a separate entity that would list on the stock exchange.

The QIA is the world’s 10th-largest sovereign wealth fund with an estimated $475 billion of assets under management, according to the Sovereign Wealth Fund Institute.

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