Markets

Qatar sets up $200m fund to drive trade in Doha stocks

February 8, 2024, 3:53 AM

A listing ceremony at Qatar Stock Exchange. 'You need more than [IPOs] to improve stock exchange liquidity,' said one market observer

Trading on Qatar bourse has fallen
QIA links up with London’s Ashmore
More asset manager tie-ups planned

Qatar Investment Authority has launched a $200 million fund for Doha-listed stocks as part of plans to reinvigorate trading on the country’s bourse.

Trading turnover on the Qatar Stock Exchange has dropped from QAR160.4 billion ($44.1 billion) in 2022, when Russia’s invasion of Ukraine boosted the prices of Gulf hydrocarbon exports, spurring local, regional and foreign investors to buy and sell Doha stocks.

The average daily trading volume on the Qatar exchange stood at 122 million shares in 2023, down 3 percent from 126 million in 2022, the according to research firm Kamco Invest.

Rival bourses saw 2023 averages of 138 million shares in Dubai, 136 million in Abu Dhabi and 164 million in Kuwait.

The exchange is owned by Qatar Investment Authority (QIA), which has longstanding ambitions to increase trading activity as part of the country’s strategy to develop Qatar’s capital markets.

QIA launched the $200 million Ashmore Qatar Equity Fund with Ashmore Group, a London asset manager, in mid-January. The sovereign wealth fund describes the fund as the first stage in an “active asset management initiative”.

One long-time trader in Gulf stocks welcomed the plan, telling AGBI: “It’s important to have IPOs to broaden the choice of listed companies, but you need more than that to improve stock exchange liquidity.

“So, Ashmore will have approximately $200 million of Qatari stocks that it can trade. Previously these were locked away but have now entered circulation and so should boost liquidity.”

QIA, which has $429 billion of assets under management (see table), has transferred part of its Doha-listed equity portfolio to the Ashmore fund.

A spokesperson for the wealth fund said that although QIA was the anchor investor, the Ashmore fund was open-ended so other investors can join too. She declined to specify the minimum subscription amount.

Ashmore Group declined to comment when contacted by AGBI.

The wealth fund's spokesperson said: “QIA is seeking to cultivate strategic and long-term relationships with leading global investment managers who can complement and augment QIA’s in-house capabilities.

“The team views its external managers as partners who share QIA’s core investment philosophy and welcomes managers willing to make a commitment to establish a presence in Qatar.”

The veteran Gulf trader said he believed the Ashmore fund would not “be the answer to everything, but presumably part of a larger process. The QIA has said there will be further tie-ups with other asset managers, and I would hope additional reforms.”

The Qatar wealth fund has already launched initiatives with local brokers to boost trading in Doha stocks.

At the end of December 2023, Saudi Arabia’s stock market capitalisation stood at $3 trillion, Abu Dhabi’s was $807.1 billion and Dubai's was $172.5 billion, according to the World Federation of Exchanges. Qatar’s market cap was $171.6 billion.