Qatar Wealth Fund Sets Up $275 Million Market-Making Program

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(Bloomberg) — The Qatar Investment Authority is setting up a 1 billion-riyal ($275 million) market-making program as the country seeks to draw more foreign investor interest and deepen its capital markets.

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Commercial skyscrapers of the Qatar Financial Centre (QFC) on the city shoreline in Doha, Qatar, on Tuesday, Feb. 14, 2023. Qatar spent more than $200 billion during the past decade redeveloping the country’s infrastructure to host the FIFA World Cup.

The initiative will run over the next five years and offer “an economic incentive by way of a rebate to lower trading costs for established market makers,” according to a statement. “The permanent program will help enhance liquidity in the market, improve price discovery, and diversify the capital markets in Qatar.”

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Qatar’s stock exchange is working to increase listings, introduce more exchange-traded funds and derivatives to help investors diversify their portfolios and better manage their investment risks. The comes amid a boom in initial public offerings in neighboring Saudi Arabia and the United Arab Emirates.

Separately, Bloomberg reported last week that Qatar’s $450 billion wealth fund and its General Retirement and Social Insurance Authority are examining a proposal to consolidate their local holdings worth up to $3 billion under a separate entity. 

The strategy is designed to increase the free float of the overall market, and lead index providers, like MSCI Inc., to increase Qatar’s weighting in market benchmarks. Lower public float is a deterrent for some funds because it means the market is less liquid and more prone to volatility when executing large orders. 

Such a move could attract an estimated $2.46 billion inflows from MSCI trackers and $1 billion inflows from FTSE trackers, according to Arqaam Capital Ltd. analysts.

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