Qatar Bourse Seeks to Gain Retail Investors With Stock Split

(Bloomberg) -- Qatar’s stock exchange is setting the stage for a split in the price of stocks in an effort to attract more individual investors to the $160 billion market.

The bourse is preparing to change the nominal value of a share in all listed companies to one Qatari riyal (27 cents) starting next month. Such a move is typically designed to lower the price of an equity and thereby stimulate dealing. Holders of Qatar National Bank QPSC, for example, with a share worth 195.40 riyals on May 2, would hold 10 times the number of equities with a price of 19.54 riyals apiece after the split.

The “face value of the stocks should be at par with other markets in the region, so retail investors can have a better sense of pricing,” Mohsin Mujtaba, director of products and market development at the Qatar Stock Exchange, said by phone. “The economic value of the companies will be the same, at the end of the day.’’

More retail participation would improve liquidity and also encourage institutional participation, he said. The average value of trade in Doha has shrunk from a peak in 2014, when the country was upgraded to the emerging-market group by MSCI Inc. The QE index fell about two years ago following the decision by a group of neighbors including Saudi Arabia to cut ties with Qatar.

The gauge later recovered losses, boosted mostly by a surge in the price of large caps following an increase in the foreign ownership limit. Still, average turnover remains lower than the level of 2015. The change in nominal price for the stocks will happen between June 9 and July 7, starting with banking and financial shares. Click here for the full timetable.

Mujtaba also said:

• The process “has to be timed in a way so it is not too disruptive for the investors and the market participants.’’
• Rules for margin trading have been reviewed and will soon be published, “hopefully before the end of May. Market making regulation changes are also underway.”

To contact the reporter on this story: Filipe Pacheco in Dubai at fpacheco4@bloomberg.net

To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net, Jon Menon, Paul Jarvis

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