Qatar Stock Exchange changes rules to promote initial public offerings

Qatar leaders are making it easier for enterprises to add themselves to the Qatar Stock Exchange (QSE) with initial public offerings (IPOs) by offering a new single-window system that will streamline registrations and make going public easier for a wider variety of businesses.

A June 19 press release titled "Window to a More Dynamic Bourse" shows how a weaker energy price induced slowdown and its appurtenant reflections has caused financial challenges within the country, where the domestic stock market has taken it upon itself to change the way that applicants get listed for IPO status.

In the past, companies had to go through the Qatar Financial Market Authority (QFMA). According to new rules, companies will now go directly to QSE’s listing department for a process that's shorter and possibly more effective. Leaders say this might open the door for more exchange-traded funds and other products to get listed on the QSE, which is the second largest exchange in the region.

Interestingly, the statement also quotes Ernst & Young MENA Strategic Growth Markets and IPO leader Mayur Pau in suggesting that companies aren't currently lining up to get listed:

“Given the continuing uncertainty in global economic performance and fluctuating oil prices, the outlook for MENA IPO activity is likely to remain subdued in 2016 unless confidence improves.” Pau said. “The key drivers to MENA IPO activity continue to be fluctuating oil prices, regional geopolitical factors and the performance of the global economy.”

However, Qatari officials feel confident, and QSE CEO Rashid bin Ali Al Mansoori expects more listings from the system and talks about speeding up a yearlong process in a press release.

According to David Roberts, an expert in the region's economy, moves like the listing changes are key in a process to wean local economies off of oil as oil prices decline.

“There’s long been a focus in the Gulf to encourage non-hydrocarbon based businesses.” Roberts told the Gulf News Journal last week. “And this has been a particular, assiduous focus of Tamim bin Hamad al Thani. This move is part of the necessary incremental steps towards encouraging further self-sustaining private sector business, away from oil and gas.”

Roberts says the move is aimed at handling low-hanging fruit - smaller businesses that might take less time to go public.

“The gains for the SMEs will have to be very simply and effectively articulated if they are to be persuaded to transition to a more regulated, more public footing.” Roberts said. “I suspect that many will not want the fuss and intrusion.”

Roberts also addressed the idea that the Qatari economy is gearing up for the 2022 World Cup.

“Thus far, Qatar 2022 has been relatively ring-fenced amid broad budget cuts.” Roberts said. “Much of this spending is dual-use – (that is) for wider infrastructure projects that will have longevity of use. So, in that sense, 2022 will remain a boost to the local economy, further protecting it from cuts. In light of more recent fiscal difficulties, there is naturally pressure across the economy to cut back, but with this being the highest-profile venture ever undertaken by the state, there is a very high cost associated – from the government’s perspective – with reneging on its 2022 promises.”



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