Qatar Exchange expected to be among most active GCC exchanges over next 12 months
Whilst the regional and international equity markets have generally been depressed post global financial crisis, early signs of recovery are appearing with higher volumes being traded on some of the regional exchanges, and more interest from foreign investors.
The GCC economies are showing positive signs of recovery across a multitude of sectors, including retail, tourism, real estate and infrastructure. According to Deloitte Middle East’s first Equity Capital Markets Confidence Survey, Qatar Exchange (QE), the Tadawul (Saudi Stock Exchange) and the Dubai Financial Market (DFM) are expected to be the most active GCC exchanges over the next 12 months, and there is a strong pipeline of issuers looking to launch IPOs regionally as well as on international stock exchanges.
The survey, which was conducted through meetings with 30 equity capital market practitioners within regional and international banks operating in the GCC, covering the MENA region, covers topics such as the macro-economic environment, valuations, the IPO process and regulations amongst other themes.
“QE is expected to be one of the most active exchanges in the GCC over the next 12 months with a strong pipeline of issuers looking to list. Of the respondents interviewed in Qatar, all expected an increased number of new listing in the coming year. It will certainly be interesting to see how QE will respond to attract issuers, given that all Qatar respondents cited increasing regulation as a trend within the coming two years” said Robin Butteriss, head of financial advisory services at Deloitte & Touche, Qatar.
In the GCC, infrastructure, retail, oil and gas, and manufacturing are expected to drive most of the growth, and are also most likely to attract potential issuers in the foreseeable future. Over 70 percent of the respondents expect the volume of IPOs in the GCC region to increase in the next 12 months.
Increases in trading volumes are driven in large part by foreign investors seeking a safe haven from socio-political turmoil in the wider Middle East region, which is positively affecting real estate and stock values in GCC countries, especially the UAE. The MSCI upgrade of Qatar and the UAE exchanges to emerging market status, effective from May 2014, has gone some way in explaining the uplift in valuations, states the Deloitte report.
Challenges cited as most typically experienced on IPO processes include mismatch of valuation expectation, lack of readiness on the part of issuer to deal with the IPO process and conforming to listing requirements. However, it is interesting to note that only 34 percent in Qatar said that IPO listing requirements are demanding or very demanding, with a majority having a favourable view of the process.
To read the entire report click here