Qatar allots $275m to a new market-making programme

The initiative will help enhance liquidity in the market, improve price discovery and diversify the capital markets

May 23, 2023

Qatar Investment Authority (QIA) has allotted $275m (QAR1bn) towards a permanent market-making programme as the country seeks to attract more foreign investments and deepen its capital markets.

The Qatari wealth fund said the initiative will run over the next five years and it will cover 90 per cent of the size of the market capitalisation listed on Qatar Stock Exchange (QSE).

QIA said the local bourse attracted the largest foreign investment flows in its history in 2022 and it was launching the market-making program “to support the continuation of this momentum and contribute to the growth of the Qatari economy.”

The permanent program will help enhance liquidity in the market, improve price discovery, and diversify the capital markets by increasing investor confidence and helping attract more foreign asset managers to invest in the Gulf country.

“The commitment from QIA aligns with its mandate to support the development of a competitive Qatari economy,” the wealth fund said in a statement.

QSE is working to increase listings, and introduce more exchange-traded funds (ETF) and derivatives to help investors diversify their portfolios and better manage their investment risks.

The strategy comes as Qatar’s stock exchange is set to welcome its first initial public offering (IPO) in almost three years under new regulations which allowed companies to offer a price range to test investor appetite and determine pricing.

The bourse missed an IPO boom that swept across the GCC region over the year past two years. “After witnessing a standout year in 2021, the GCC IPO market witnessed strong activity throughout 2022 and surpassed its previous year’s achievements,” said Kamco Invest.

Proceeds from 48 issuances soared by 3.1x to $23.38bn in 2022 from $7.52bn in 2021, according to data from Bloomberg and stock exchanges.

Qatar joins GCC IPO frenzy

Meanwhile, QIA’s initiative comes amid an IPO frenzy in Saudi Arabia and the UAE. State-backed companies in the GCC are stepping up efforts to boost domestic equity markets while supporting governments’ efforts to diversify their economies away from heavy reliance on oil revenues.

Over the years, GCC stock markets have also introduced an array of initiatives including flexibility on the minimum stake size required for share sales and promising to reduce or forgo listing fees in a bid to encourage more domestic listings.

Abu Dhabi launched a $1.4bn (Dhs5bn) IPO fund in October 2021 to incentivise private companies to list on the local exchange. Abu Dhabi Securities Exchange (ADX) also slashed its trading commissions by 50 per cent and extended trading hours by one hour to enhance market liquidity and attract foreign investors.

ADX had the largest IPO in Q1 2023 globally, with ADNOC Gas raising $2.5bn through an offering that was oversubscribed 58 times. ADNOC Gas is the sixth company that the ADNOC Group has listed and continues the trend into 2023 as ADNOC L&S is set to debut on the local bourse on June 1.

EY projected that the outlook in the MENA region for the rest of 2023 remains positive with initiatives such as the Abu Dhabi IPO Fund expected to support private companies on their path to becoming an IPO.

Dubai approved the establishment of a Dhs2bn market-maker fund in November 2021. The city is also unveiled a Dhs1bn fund to encourage tech companies to list on Dubai Financial Market.