Qatar is considering plans to increase trading in local stocks in a bid to draw more foreign investor interest and deepen markets.
The Qatar Investment Authority, the Gulf state’s $450 billion sovereign wealth fund, and the General Retirement and Social Insurance Authority are examining a proposal that would involve consolidating their local stock holdings worth up to $3 billion under a separate entity, according to people familiar with the matter.
The new entity would hire third-party funds to actively manage and trade the shares, effectively boosting activity in the overall market, they said, asking not to be identified because the information isn’t public.
The hope is that more trading will raise investment returns, reduce costs and help with diversification, they added. The change may take place by the end of the year, said the people, adding that no final decisions have been made. It wasn’t immediately clear if other state firms would pool their assets. Representatives for the QIA and state pension fund didn’t immediately return a request for comment.
The strategy is designed to increase the free float of the overall market, and lead index providers, like MSCI Inc., to increase Qatar’s weighting in market benchmarks. Lower public float is a deterrent for some funds because it means the market is less liquid and more prone to volatility when executing large orders.
Qatar is following in the footsteps of Saudi Arabia, which increased overall free float in 2021 after combining $29 billion of local and foreign stocks from Public Pension Agency and the General Organization of Social Insurance.
As a result of that change and a stake sale by the kingdom’s sovereign wealth fund, Saudi Arabia received at least $815 million in flows from passive funds, according to an estimate from EFG-Hermes Holding SAE.
