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Wed 4 May 2011 09:59 PM

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Qatar may draw $2bn on bourse upgrade

BNY Mellon official says new foreign investment likely if bourse wins emerging market status

Qatar may draw $2bn on bourse upgrade

Qatar would see at least $2 billion

in new foreign investment should it be upgraded from frontier

market to emerging market status by influential index compiler

MSCI in June, a BNY Mellon vice president said on Wednesday.

"Reports we've seen indicate Qatar would benefit from at

least $2 billion in new money from investors who track the MSCI

index," said Dubai-based Peter Gotke.

"You'd expect these indices to attach themselves very

quickly, with a significant amount of money coming in a very

short timeframe, possibly within six months or even three

months," Gotke said.

"And with PE ratios in Qatar relatively lower than in other

parts of the region, $2 billion itself could be a very

conservative number."

Though Qatar and the United Arab Emirates have been rebuffed

twice by MSCI for failing to raise foreign ownership limits and

switch to a new settlement system, Gotke said he believes both

have made significant advances toward that goal.

"Certainly Qatar, and to a certain extent UAE, have made

really good progress. The DvP (clearing system) is in place.

It's been pushed back a bit in UAE, which may or may not have

consequences," Gotke told reporters on the sidelines of an event

in the Qatari capital Doha.

"On the foreign ownership side, there are companies here in

Qatar that have managed to get permission to ramp up to 49

percent. That is indicative I think of a flexible situation."

"If the apparatus is that flexible, hopefully it'll resonate

with MSCI, but whether it will resonate enough I cannot say."

Though many see low volumes and regional unrest dampening

prospects for the two Gulf states, Qatar, if upgraded, would

move on the radar of an estimated $5-$6 trillion in assets under

management by institutions that track MSCI indices, he said.

With a soaring economy and gross domestic product expected

to grow 18 percent this year, Qatar's outlook is already among

the world's brightest.

"The appetite for Qatar is amazing. We're always asking

investors where they want to invest. Qatar in the last year or

so has been in the top three. It's a real area of interest,"

Gotke said.

"One of the knock-on effects of an upgrade would include

more IPOs, more companies looking to grow not just locally, but

by attracting foreign investors.

"Qatar has been very active as a sovereign in London.

There's clearly a desire at the sovereign level, and that

quickly washes down to the corporates here to build portfolios


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