Qatar's Supreme Council for Economic Affairs and Investment, the body responsible for the middle eastern state's economic, energy and investment policies, has approved the establishment of a junior market for small and medium enterprises (SMEs) at Qatar Exchange.
The management of Qatar Exchange will implement the project with input from relevant financial and governmental entities, including Enterprise Qatar, an SME promotional organisation, the state-owned Qatar Development Bank, and Silatech, a youth employment social enterprise.
Ahmad Al-Sayed, vice chairman of Qatar Exchange’s board, stated that the proposed criteria will give SME owners the opportunity to be listed on the Qatar Exchange in accordance with lighter and more flexible regulations, in addition to giving them further finance sources to grow and expand their businesses.
“The SME market will offer investors more options as well, through increasing the number of companies to invest their shares in,” he added.
Qatar is due to be reviewed by index provider MSCI for a potential upgrade from ”frontier market' status to ”emerging market' in the coming months. The main challenges to the revised status, highlighted by MSCI during a 2010 review, included a lack of true delivery versus payment (DvP), mandatory use of custody and trading accounts and stringent foreign ownership limits.
DvP rules were introduced in April, removing the need for dual accounts. Other related changes are under review.
As many European and US long-only investment funds do not invest in stocks listed in countries below emerging market status, the reclassification is expected to increase investment and liquidity from overseas market participants.