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Satyendra Pathak
Doha
The Qatar Stock Exchange (QSE) main index on Monday witnessed its biggest jump since January 2016 after Qatar National Bank (QNB) announced its plan to increase the percentage of non-Qatari ownership in its capital to 49 percent from 25 percent.
QNB, the largest lender in the Middle East and Africa by assets, jumped its maximum daily limit of 10 percent after the announcement.
The QSE main index surged 410.38 points, or 4.97 percent, to close at 8,663.04 points. This is the biggest leap witnessed by QSE since January 19 when the main index had rallied 5.5 percent.
The announcement by QNB to increase foreign ownership limit (FOL) meant that index trackers, especially the international investors who track the emerging market (EM) indices, will increase their allocation to Qatar mainly in QNB, Amwal Asset Management Head Talal F Samhouri told Qatar Tribune.
This in turn will give the chance for a larger turnover of other stocks, since sellers of QNB will have to recycle their proceeds to other Qatari stocks, Samhouri said.
"The increase also was due to the lower valuation of the Qatari market compared to other GCC markets. The market already had good conditions for a rebound when the news about QNB's plans came. It will attract active investors as they usually look for liquid markets," the fund-manager said.
"We expect other companies to follow suit and increase the FOL," Samhouri said.
Commenting on the recently listed exchange traded fund (ETF) on the Qatari bourse, he said,"Today, the QETF proved that it can be a close resemblance to the whole market. This shows that owning the market though the QETF can be advantageous."
According to another market expert, raising the ceiling was likely to almost double QNB's weighting in emerging market equity indexes, eventually causing new flows of passive funds into the stock.
The financial analyst forecast that QNB's stock price would rise to QR140 and QR145 over the coming sessions. The bourse would see an upward trend in the coming period boosted by QNB's announcement, the financial analyst said.
QNB's announcement also had a positive impact on several stocks such as Industries Qatar and Zad Holding as they too surged the maximum daily limit of 10 percent.
The liquidity of the bourse witnessed a huge surge to QR871.54 million from QR125.22 on Sunday, while the trading volume rose to 17.87 million shares from 5.36 million in the previous session.
Vodafone Qatar's stock, which advanced 1.8 percent, led the bourse in terms of trading volume with 3 million shares, while Qatar Navigation's stock, which levelled up 1.52 percent, topped the market in terms of liquidity with QR136.7 million.
