Cbank to issue instructions allowing local banks to trade on the market.
Qatar’s benchmark index rose the most in the world and to the highest level in more than four months as the central bank plans rules to allow local banks to trade in shares and open brokerages.
Qatar National Bank, the Gulf country’s biggest bank, advanced to the highest since September 2008. Qatar Islamic Bank SAQ, the emirate’s largest bank complying with Muslim regulations, climbed the most since December.
Qatar’s DSM 20 Index rose 3.8 percent, the biggest fluctuation among global equity markets tracked by Bloomberg News, to 7,314.69. The measure closed at the highest since Oct 27 and has gained 7.3 percent this week
State run Qatar News Agency reported March 15 that the central bank will soon issue instructions that will allow local banks to trade on the market, citing Governor Sheikh Abdullah Bin Saud Al Thani.
Qatar also plans to enable banks to obtain brokerage licenses, the bourse said in a statement on the same day, citing Finance and Economy Minister Youssef Kamal.
The decision to allow banks to buy and sell shares “has been a trigger to get the market moving,” said Akber Khan, director of asset management at Al Rayan Investment. The QE Banking Sector Index rose 4.1 percent to the highest level in more than five months.
The central bank’s instructions were distributed to local banks while markets were still open yesterday, Mohamed Abu Ghoush, head of equity brokerage at Al-Ahli Bank in Doha, Qatar, said. No one at the Qatar Central Bank was available to comment on when the decision would take effect.
The volume of shares traded on the Doha bourse surged to 20.9 million today, compared with a six month daily average of 9.5 million. Qatar National Bank jumped 7.4 percent to $36.2. Qatar Islamic Bank increased 3.9 percent, the most since Dec 14, to $21.4.
Khan said: “Foreign capital, in particular, has come in aggressively in the last couple of days in anticipation of a ramp up in volumes and a reversal of the underperformance over the last 12 months."
Many investors see the market as having “underperformed relative to where fundamentals would justify.”
Qatar’s government forecasts economic growth of 16 percent this year as three new gas liquefaction plants start operation.
The country is holder of the world’s third largest gas reserves and the biggest producer of gas cooled to a liquid for transport by ship.
The 20 companies in Qatar’s benchmark index are valued at 12.4 times earnings, that compares with 19.2 for the regional Bloomberg GCC 200 Index.