Qatar Stock Exchange’ (QSE) benchmark index slipped 0.23 percent down on profit-taking after strong gains before the Eid holiday. Banking sector edged down 0.47 percent with Commercial Bank and QNB shedding 2.07 percent and 1.05 percent, respectively.
The stock exchange implemented splitting shares to a nominal value of QR1 at the end of trading. Commercial Bank of Qatar and Qatar First Bank are the first two stocks affected.
QSE announced yesterday it implemented the share splitting of QFB and Commercial Bank after the end of trading yesterday. “The split of shares for Qatar First Bank (QFBQ) has been executed, effective tomorrow, Monday, 10 June 2019,”, it said. As per the share splits, the new number of QFBQ shares will be 2,000,000,000 at an adjusted closing price of QR 0.429.
Commercial bank’s new number of shares is 3,291,766,450 at adjusted closing price of QR4.74. The stock splits will run through July 7.
A stock split is an increase in the number of company’s shares into further shares with a lower nominal value. It does not have any impact or change in shareholder’s equity and does not affect the total market value of the customer’s portfolio.
Market experts suggest a three-pronged advantage to the share splitting. For companies, the share splits will help broaden the shareholders’ base and increase the liquidity of the company’s shares.
For investors, the share split will reduce costs of trading in the company’s shares. It will also provide greater flexibility in trading options due to increased number of shares and decreased market value.
The advantage to the market is that the share splitting will help increase number of listed shares in the market and increase number of shares available for trading. The splitting of shares will increase trading volume in the market and help attract new segments of small investors. It will also help ease of entry and exit from the market.
