DOHA: With MSCI putting Qatar on global investors’ radar by enhancing its market status to ‘Emerging’, the country is expected to witness new institutional investment flows from emerging markets and global index trackers.
“Qatar may see a bigger impact in coming years because, unlike the UAE, the market was not previously included in the FTSE Emerging Markets Index, which is tracked by some major passive investors”, Invest Ad (Abu Dhabi Investment Company) noted in its Middle East Market Outlooks released yesterday.
Qatar has been an underperformer compared to other regional markets over the last year and, with many stocks now attractively valued, the MSCI decision could prove to be a catalyst for a long-term rally.
With the markets on the radar screen of global investors, Qatar listed companies will now need to step up their efforts on investor relations and demonstrate transparency.
The move may well give market regulators an incentive to push for higher standards of corporate governance and disclosure.
Greater market liquidity could also open up the dormant IPO market, and we may even see companies from neighbouring countries to start to consider listing in Qatar as a way of tapping global emerging market investors.
The report noted volatility is likely to continue in GCC equities markets as investors rotate out of global emerging markets over fears that the US Federal Reserve will start to gradually withdraw its “QE3” monetary easing programme. The UAE has already seen a sell-off in the country’s biggest listed firms, which could present a buying opportunity when global markets stabilise.
The decision by index compiler MSCI to include Qatar and UAE in its emerging markets index should also boost long-term sentiment in the region’s markets.
While investors will be exercising caution over the next few months, the Qatar market could benefit if the government announces any acceleration of infrastructure spending. Investors will also be looking for second-quarter earnings results for further proof that consumer demand across the GCC remains buoyant. The Peninsula
