Rashid bin Ali Al Mansoori, CEO, Qatar Stock Exchange: Interview

Interview: Rashid bin Ali Al Mansoori

What impact have changes in broader macroeconomic conditions had on domestic investor confidence and market sentiment?

RASHID BI N ALI AL MANSOORI: Macroeconomic factors do have an impact on domestic investor sentiment, and our market has, by and large, been a beneficiary of them. The stabilisation and uptick in the price of oil was a positive contributing factor, as a number of our listed companies benefitted from the increase in national income.

The recent pullback in the oil price raised some concerns, however, but the market has remained resilient. Our banks continue to enjoy strong asset and deposit growth, with very low rates of non-performing loans, boosting profitability across the sector and providing a solid base for the benchmark index. Rising US federal interest rates could impact negatively on our market. If our dividend yields fall below yields on bank deposits, investors will divert funds away from riskier assets.

Which further initiatives can be put in place to optimise the regulatory environment and facilitate foreign participation in the market?

AL MANSOORI: Immediately following the changes to foreign ownership limits for a number of our listed companies, we saw an increase in foreign capital inflows of approximately $2.2bn. We have also seen substantial changes in trading patterns, with foreign institutions being far more active in the market than previously. With the economy staying strong, this trend should continue. We are working hard to bring more high-quality companies onto the exchange, and this will increase both the breadth and depth of our market and potentially bring further foreign capital inflows. To this end, we are working with our regulator to try and ease the burdens associated with listing.

At the same time, we are working on expanding our service offering to better meet the needs of our investors. We hope to introduce securities lending and borrowing and covered short selling, but will also look to increase the number of exchange-traded funds and introduce other fund-based products, such as real estate investment funds. All these initiatives are designed to attract foreign investors.

Will the continued launch of small and medium-sized enterprises (SMEs) on the QSE Venture Market increase interest in listing from local firms?

AL MANSOORI: The SME financing situation in Qatar is somewhat unique. Currently, equity finance is not the preferred method of funding, as bank loans and family money are abundant and easier to access. We are, of course, very keen to attract family companies and SMEs to the exchange, and we have an active outreach programme to encourage them to list. We also have partnerships and agreements with other institutions, such as the Qatar Development Bank, to support their SME development activities. More needs to be done to incentivise companies to list and ease the regulatory burden of doing so, and we recognise this.

How can regional markets continue to diversify their product and service offerings to attract both domestic and international investors?

AL MANSOORI: All regional markets must expand access for international investors, by improving the post-trade environment, making the opening of an account more efficient and reducing transaction costs. We also need to strengthen and internationalise regulatory and legislative frameworks, and improve both regulatory and corporate transparency. This means improving corporate governance and adopting best practices in investor relations and environmental, social and governance reporting. On the product side, derivatives are gaining traction, an important consideration for foreign investors as it provides them the means to hedge. We also need to listen to what our international investors and other stakeholders are telling us about how our market is performing and the issues they face.