Global Finance magazine praised the initiatives recently implemented by the Qatar Stock Exchange, which aim to enhance the range of products and liquidity in the Qatari stock market, and continue to develop the financial sector in Qatar as part of the National Vision 2030, noting that this will contribute to attracting new investors and enhancing investment opportunities.
The financial sector magazine reported that the Qatar Stock Exchange executed its first local securities lending and borrowing transaction last May as part of its strategy to increase market liquidity. This step represents an important development for the Qatar Stock Exchange, as it looks to further develop the market, products and securities lending.
Global Finance indicated that HSBC Bank acted as custodian, agent and lender, while QNB Financial Services (QNBFS) acted as borrower, and the Qatar Stock Exchange worked with Edaa, a licensed service provider affiliated with the Qatar Financial Markets Authority that provides a range of basic services related to securities and financial instruments.
According to the Qatar Stock Exchange, securities lending and borrowing operations are in line with the third strategic plan for the financial sector launched by the Qatar Central Bank in November 2023, which aims to continue developing the financial sector in Qatar as part of Qatar National Vision 2030. The development of capital markets is one of the main pillars of the third strategic plan for the financial sector by creating an infrastructure and regulatory environment compatible with international practices and advanced markets to increase the size and liquidity of the Qatari market.
Investment strategies
Hussein Fakhreddine, CEO of QInvest, said the deal represents a significant milestone in the financial strategic plan, which is part of the Qatar National Vision 2030, allowing for more sophisticated investment strategies and unlocking significant liquidity. QInvest is also looking to strengthen its activities and has aligned its investment banking advisory services with the Qatar National Vision 2030 for the financial sector. “We are, and will remain, active in the securities market in the form of active mergers and acquisitions, as well as equity and debt capital market transactions,” Fakhreddine said. The report also noted that the Qatar Investment Authority has allocated QAR1 billion ($275 million) to a permanent market-making programme on the Qatar Stock Exchange. “This programme aims to enhance market liquidity, improve price discovery and diversify capital markets, thereby attracting more foreign investment and boosting investor confidence,” Fakhreddine said. The initiative is set to run for the next five years.
Market growth and liquidity
In this context, Maha Al-Sulaiti, Acting CEO of QNB Financial Services, said that QNB plans to provide this service to its clients who are qualified investors who can benefit from the new trading strategies on the Qatar Stock Exchange, noting that when the demand for such transactions increases, it expects a proportionate growth in market volumes and liquidity.
Adel Abdulaziz Al-Khashabi, Chairman of QNBFS Brokerage, said: “It is important to note that SLB (Securities Lending and Borrowing) is part of several key initiatives supported by the Qatar Stock Exchange to enhance the size and liquidity of the Qatari stock market. These initiatives include encouraging new listings through IPOs and direct listings, the most recent example being the successful listing of Techno Q on the Enterprise Market. We expect more IPOs and listings to stimulate demand and market activity. Going forward, the introduction of the derivatives market will further stimulate market activity and enhance our attractiveness to institutional investors.”
Other Market Initiatives
According to the Global Finance report, the development of SLB activities, along with other market initiatives, will provide traders and investors with access to more advanced investment strategies, hedging mechanisms and securities financing. This is likely to attract new investors to the Qatari market and enhance investment opportunities.
It is worth noting that the Qatar Stock Exchange, the Qatar Financial Markets Authority and the Qatar Securities Depository Company have worked together to introduce the required improvements to the regulatory framework and market infrastructure, in addition to publishing new rules and procedures related to securities lending and borrowing, effective from March 25, 2024, when the Qatari market shortened the settlement cycle from T+3 to T2.
The existence of securities lending and borrowing activity and its efficient operation, in addition to the existence of hedging mechanisms and the launch of the derivatives market in the near future, are among the main criteria for upgrading the Qatari market from an emerging market to an advanced market by many global indices such as MSCI and FTSE.