Qatar Ups ‘Efforts’ to Raise Foreign Caps Before MSCI Decision

Qatar said it’s making “extensive efforts” to raise foreign ownership limits of companies on its bourse, a week before MSCI Inc. decides whether to upgrade the nation to emerging market status.

The foreign ownership caps of “several large listed companies is at or close to 25 percent of their market capitalization,” the Qatar Exchange cited Yousef Hussain Kamal, the Persian Gulf nation’s finance minister, as saying in an e-mailed statement today. “Several companies have actually exceeded this percentage.” Most companies in Qatar limit overseas holdings at 25 percent.

Qatar and the United Arab Emirates are under consideration for a possible reclassification at MSCI on June 11 from their frontier-market rankings for the fifth year. The index provider, whose gauges are tracked by investors managing about $7 trillion, said last year foreign ownership limits in Qatar needed revising. The caps are the main obstacle to an upgrade, Citigroup Inc. analyst Maria Gratsova said in a report today.

“The increase in the number of shares available to foreign investors significantly opens up the market in Qatar,” Kamal said in today’s statement. “This affirms the commitment of the government to transform Qatar into a regional investment hub.”

‘Attractive’ Environment

The nation is “making extensive efforts to provide an investment environment that is more attractive for foreign investors to direct their investments towards the Qatari market,” the statement cited Kamal as saying.

Commercial Bank of Qatar QSC and Qatar Islamic Bank have requested that the Qatar Exchange increase shares available to foreign investors to 25 percent of their market capitalization and changes can be implemented within nine months, with other companies expected to follow, he said.

Some companies have expressed willingness to amend current limits set at 25 percent of their free float shares to 25 percent of their full capital, according to the statement.

Industries Qatar, the petrochemicals company with the second-heaviest weighting on Qatar’s bourse, raised its foreign ownership limit in September to 12.25 percent from 7.5 percent. The shares have surged 29 percent since the end of that month.

T. Rowe Price Group Inc. said in an interview on May 21 that Qatar deserves to be raised to emerging status. An upgrade could result in $430 million flowing into the country, London-based HSBC Holdings Plc analysts Vijay Sumon and Joaquim de Lima wrote in a research report dated May 31.

New York-based MSCI groups markets according to economic development, trading volumes and accessibility and categorizes seven bourses in the Gulf Cooperation Council as frontier markets.

Qatar’s benchmark QE Index has rallied 11 percent this year, outpacing a drop of 5.7 percent for the MSCI Emerging Markets Index.

Before it's here, it's on the Bloomberg Terminal.