CEO of one of the world’s most highly respected bourses in the world, Rashid bin Ali Al-Mansoori discusses the confidence shown by international agencies in the Qatar Stock Exchange’s solidity and performance, and how it is encouraging more investors and Qatari business owners to be part of growing the nation’s economy further.
The drop in commodities prices and the political crisis affecting the region have certainly created major challenges for the economies in the Middle East. What is your impression on what has been the impact of these on Qatar and how has the country faced these challenges?
You are right. We could not escape some of the events around us, such as the drop in oil prices or political upheavals and tensions in the region. These even impacted international markets. But the Qatari economy remains strong. We saw evidence of this when companies listed on the Qatar Stock Exchange distributed very generous dividends at the beginning of the year. This is because Qatar has overcome worse crises, and has continued to perform well.
So we build on that, and even though there are still some economic issues in China and other emerging markets, for example, we still survive because of the vision of the Qatari government and our robust economy achieved through effective fiscal controls and the diversification of the country’s revenues. Contributions to GDP from the non-hydrocarbon sector continue to expand, in response to the will of the government to diversify the economy away from a dependence on oil and gas.
This is one of the major achievements that should be highlighted: 50% of GDP now comes from the non-hydrocarbon sector. This shows that Qatar was already prepared to face this crisis, and is also part of the government’s long-term National Vision 2030. What role is the financial sector playing in order to achieve these goals?
I will speak about our most important role in the market, which is acting as an intermediary, bringing issuers and investors together for mutual benefit. We strive to be an investment destination of choice for both international and local investors, providing access to listed companies of undoubted quality, which are both financially sound and continue to grow.
As part of this, we are also intent on attracting new issuers, with a strong focus on family-owned companies. We know there are many successful companies in the non-hydrocarbon sector owned by families and we need demonstrate to them the advantages of being listed on the exchange. This also broadens our offering to the investor community.
We know that there are still some companies that shy away from listing on the stock market, because they fear they will lose control of their business or their assets. We constantly visit them to reassure them that this will not be the case. On the contrary, we believe that they will actually grow with us and make a greater contribution to the Qatari economy as a whole. This is a very important role we play.
We also try to enhance the investment environment through new projects, talking with our stakeholders and the regulator, with a view to improving market rules to ease access and boost confidence so that our market becomes more attractive and relevant for the investor community as a whole.
Internally, we continue to assess and improve our infrastructure and technology. We have introduced a number of career and social development programs for our staff across all levels with the aim of improving efficiency and service delivery for our members and stakeholders.
So the role we play in achieving the Vision 2030, from an economic standpoint, is that we provide both the means for companies to secure equity financing to support growth, and we provide the mechanism by which citizens can share in that economic growth through equity ownership.
We also take our responsibilities in the spheres of social and human development very seriously, ensuring that we provide support to our staff, members and investors through initiatives in education and social awareness.
We are also active, through programs with our listed companies, in promoting environmental awareness and sustainability, encouraging them to keep investors aware of their efforts and providing regular reports on their activities in this area.
The Prime Minister said at the Gulf Economic Forum that ‘Qatar is a gateway for Gulf investments and joint ventures’. Do you think it can also be a bridge between the West and the Middle East?
Yes. Qatar is an open and inclusive society, which is investing heavily in modern technology, transportation systems and basic infrastructure. The government has established the Qatar Financial Center, with its own internationally recognized legal framework, through which international investors can establish a regional presence and partner with local companies.
Great strides have been made by Qatar in promoting the country as business friendly and welcoming. Economic expansion continues to be among the highest in the region. A number of our companies are now world class (Ooredoo, Qatar Airways, QNB, Nakilat, and Qatar Petroleum). Qatar is now being recognized as an attractive destination for tourism. Hosting prestigious sporting events adds to that influence and further promotes us as a viable gateway to the region, not just the GCC.
The country has been upgraded by Morgan Stanley and Standard and Poor’s—the latter even downgraded some countries in the region such as Saudi Arabia only recently, while affirming Qatar’s rating. What has been the impact of this upgrade and why are these agencies still so confident in the Qatari economy?
The confidence is well placed. There is a strong belief among investors in the underlying strength and growth prospects for the Qatari economy. Our listed companies on the Qatar Stock Exchange have benefitted from consistent and attractive dividend yields, among the highest in the region. Our companies have always been generous with their dividends. Furthermore, thanks to the MSCI upgrade, we have witnessed an increase in international investment inflows coming to Qatar and in the number of trading accounts being opened by international investors. For example, in the first three months of 2014, after the announcement of the upgrade, there were the same number of new accounts opened as there were in the whole of 2013.
We broke records in 2014 in both index performance, which saw a year-on-year increase of nearly 50% and a huge increase in the daily turnover on the day of the upgrade to over QAR 4 billion. The upgrade of the Qatar market by MSCI or S&P, and this year by the FTSE, is an internationally recognized benchmark which attests to the fact that Qatar Stock Exchange is meeting international standards. This should give added confidence to any international investors wishing to add any of our listed companies to their investment portfolios.
Last year, Doha hosted the Annual Meeting of the World Federation of Exchanges. What has been the main outcome of this meeting?
Qatar Stock Exchange joined the World Federation of Exchanges in 2013. In 2014 we built sufficient confidence amongst the members that we were offered a seat on the board of directors, which has only eight members. They also trusted us to host their annual conference here in Doha. The event is prestigious and enhances cooperation amongst international exchange operators, providing opportunities for networking, communication and discussions on various topics, including the role and challenges faced by emerging markets and the impact of regulatory change on financial markets in general.
We received praise and recognition from all the attendees for the quality of the event and it was opined by many that this was the best event of this kind that they had attended.
Qatar is a leading force in the region when it comes to Islamic finance. What is its importance to have a more vigorous financial sector?
This is part of the country’s awareness, and it is important because it gives the country diversification in its revenue and income. Developing the financial sector and the rules and regulation is one way of doing it. Developing the legislation for Islamic finance is another.
Even non-Islamic countries and investors trust Islamic finance, because it shows resilience in any crisis. Islamic financial institutions have remained strong even through all the recent crises. We are part of a community of millions of Islamic investors and we are starting to see investors from different countries across the world and from different walks of life who are interested in investing in Islamic products and companies. Islamic finance is now becoming particularly prevalent and accessible across Europe.
In January the QFC introduced a new set of regulations and you stated that ‘We are currently working with a local asset manager to launch the largest Sharia-compliant ETF in the world’. Is this still ongoing?
Yes, it is ongoing and we hope it will be launched this year. Insha’Allah.
This year we’ll see the second edition of the US-Qatar Economic and Development Forum, which will strengthen even more the relationship between both countries. What are the main lines of discussion that you would like to present?
The cooperation with the US has been ongoing for a long time, and we think the financial system and the investment opportunities are very strong. The cooperation, the shared experience, and the shared opportunities are some of the things that have to be explored. We need to cooperate further and find ways to develop potential mutually beneficial investment opportunities.
As you know, we were in a partnership with NYSE Euronext for a number of years. They held 20% of Qatar Stock Exchange during that period, and we benefited from that partnership by adopting their state-of-the-art technology and from their expertise and experience in both exchange operations and regulatory reform. There are always new ways to explore potential partnerships.
As a stock exchange, we would like to see more investors and companies from the United States who are interested in working with us, our asset managers, financial institutions and investors. One of our missions in Qatar is to cooperate with the international community.
Regarding the future management strategies, what do you have in mind for the Qatar Stock Exchange in the mid-term?
We are concerned with ensuring we continue to support our domestic investor community, but also with boosting our attractiveness as an investment destination for international investors. As part of the process, we continue to investigate, promote and implement improvements to ensure we enhance our operational effectiveness, and we also embark on annual roadshows and attend international conferences to promote and build awareness of our exchange and our listed companies. We have witnessed increases in the number of international investor accounts being opened and have been delighted with the progress we are making in boosting Qatar’s image around the world. Our operational and regulatory improvements have resulted in us being upgraded by MSCI and now by FTSE Russell.