DOHA: A good number of companies will get listed on Qatar bourse in the coming months. Several companies have expressed their interests in listing on Qatar Exchange (QE). The bourse is waiting for the procedures to be completed, Rashid bin Ali Al Mansoori (pictured), CEO, Qatar Exchange said yesterday.
“Currently, the total number of companies listed on Qatar Exchange is just 43. It’s a very small number in terms of share trading,” Al Sharq quoted Al Mansoori as saying.
In addition to state entities, a large number of private companies have expressed their interests to get listed. There is a huge focus on family-controlled businesses, a sector that contributes nearly 80 percent to the national economy. The bourse will soon host an awareness conference to convince the family-run companies about the benefits of going public.
Earlier, addressing an event hosted by the QE to introduce its recently launched Liquidity Provisions (LPs) on the local bourse, Al Mansoori said boosting market liquidity is one of the key components of Qatar bourse’s overall development strategy. QE is working with the regulator and other agencies to improve the market access. The bourse is committed to seek out ways to improve liquidity across the board for the benefit of investors.
LP is an activity undertaken by the Qatar Financial Markets Authority (QFMA)-licensed institution to provide sell and buy orders on a continuous basis with minimum bid-ask spread. Currently, QE enjoys the presence of two liquidity providers that help enhance trading opportunities, improve price stability and larger volumes going through the order book over time.
“On Qatar Exchange, there are two distinct types of LPs under the regulations. The first requires an agreement between the licensed LP and the Exchange, whereby the LP obtains an incentive, through discounts on exchange transaction fees, to make markets in selected stocks…..The second form of LP involves an agreement between the LP and a specific listed company. In this arrangement, the LP obtains an incentive from the company or issuer for supporting liquidity in their book,” Muffadal Kagalwala, an expert at QE said while making a presentation.
LPs are also a critical for Exchange Traded Funds (ETFs). In ETFS, LPs do not only provide liquidity allowing investors to buy and sell, but are also instrumental in the creation and redemption of units, which allows the ETF to grow, whilst ensuring that the ETF units pricing is adequately balanced against the value of the fund, the so called net asset value or NAV, Kagalwala added.
Elaborating on the advantages of LPs on a bourse, Hamad bin Khalaf Al Moudadi, Chairman of the Board of Directors of the Group Securities, said LPs would give better opportunities to investors, more liquidity in the share attracts new investments which in turn raises its relative price. It has been proved statistically that running liquidity provider system on a share leads to an improvement in its relative price.
Higher share price raises the market value of a listed company, this provides the company additional capital value when it seeks capital increase which is considered direct income on the company’s balance sheet.
Al Moudadi said the Group has begun liquidity provision since 2008 and is currently applying this scheme on the Al Mannai Corporation and will implement it on the Ooredoo in the near future.
The Peninsula
