DOHA: Qatar Central Bank’s (QCB) decision to tighten cap on local banks’ investment in stocks and bonds, has drawn flak from a section of investors and market analysts.
The central bank’s directives to the banks to restrict their total investment in equities and debt instruments to 25 percent of their capital and reserves is “untimely” and would seriously upset Qatar’s ambitious development agenda, they cautioned.
The QCB’s decision to set new limits for investment in individual companies and unlisted securities is also tend to derail Qatar’s development ambitions, they feared.
“I am afraid that it is not a well-thought out decision. The central bank’s decision will have a serious bearing on the top lines of Qatari banks and financial institutions,” commented Nasser Al Mansouri, CEO of Qatar and Oman Investment Company.
Ideally an increasing investment in the equity portfolios is expected to revive Qatar’s fledgling financial market. As the country has lined up multi-billion-dollar projects in its run up to the World Cup, liquidity is key for the country
Mansouri said that the state is not in need of funds from banks. The state budget has projected huge surplus.
QCB’s decision came on a wrong time. The decision will adversely affect the balance sheet of the companies listed on Qatar Exchange.
He added: The banking sector will not be the only segment that would be hit by the decision. The decision will also have its bearing on the earnings of individual investors.
Mansouri felt the QCB should have studied the possible impact of such a decision before slapping it on banks and the financial institutions.
Taha Abdul Ghani, a senior executive with a financial advisory company said the central bank’s decision is tend to decelerate the projected growth of Qatar’s financial and banking sector.
“The MSCI’s decision to elevate Qatar to emerging market status was a great boost to the market senitments. But the Central Bank’s decision has shaken that confidence,” he said.
However, Qasim Muhammad Qasim, a local economist, hoped the QCB’s decision is meant for better regulating the market. The decision will bring in an improved discipline in Qatar’s financial market, he said.
As per the new decision, the central bank has set new limits for investment in individual companies and introduced a 15 percent ceiling for total securities investment outside Qatar. According to market analysts, four leading banks in Qatar would be most affected by the new rules.
The Peninsula
