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New Qatar ETF Soars as Foreign Ownership Limits Increase


Shares of the new iShares MSCI Qatar Capped ETF (QAT) are up 3.5% Tuesday, making the fund one of the bright spots in an otherwise dreary day for emerging markets ETFs, after the Middle East nation boosted foreign ownership limits for Doha-listed stocks.

The long-awaited foreign ownership limit increase comes a week ahead of Qatar’s ascent from frontier markets status to the MSCI Emerging Markets Index. Fellow Gulf Cooperation Council state United Arab Emirates will join Qatar in making the leap to emerging markets status. The countries are the first GCC member states to be promoted to an emerging markets index. [Departures Could Help Frontier ETF]

“Investors outside of the six member GCC nations may own shares of companies listed on the QSE by a percentage that does not exceed 49%, from a previous limit of 25%,” according to Emerging Equity.

“The Ministry of Economy and Commerce and the Qatar Financial Markets Authority (QFMA) will immediately take the necessary measures to put these directives into effect,” according to the Qatar News Agency.

Earlier this month, MSCI approved 10 Qatari for admittance into the MSCI Emerging Markets Index, including several of the largest Qatari banks. QAT, which debuted late last month, allocates over 56% of its weight to the financial services sector.

Qatari banks are viewed as the strongest GCC financial institutions with the possible exception of their Saudi Arabian counterparts. [Bank on Qatari Banks]

Other ETFs with significant Qatar exposure are also trading sharply higher Tuesday. For example, the Market Vectors Gulf States Index ETF (MES) is up 3% while the WisdomTree Middle East Dividend Fund (GULF) is higher by 1.5%.

MES and GULF have weights to Qatar of 24.8% and 32.1%, respectively. Neither GULF nor MES track an MSCI index, meaning the two ETFs are unlikely to be significantly affected by Qatar and UAE moving to the MSCI Emerging Markets Index. [Investors Flocking to Qatar, UAE Lifts These ETFs]

UAE currently allows foreigners to have stakes of up to 49% in businesses located outside free zones, according to Reuters. However, in 2013 UAE’s Federal National Council rebuffed a plan that would have eased restrictions on foreign ownership of companies based in the second-largest Arab economy.

QAT Sector Weights


Chart Courtesy: iShares