Wednesday, 22 September 2021 08:45 GMT

Best time to invest in ETFs as FOL increases


(MENAFN- The Peninsula) By Deepak John | The Peninsula

Doha: With increase in Foreign Ownership Limit (FOL) in Qatari companies, it is the right time to invest in the Exchange Traded Funds (ETFs), said an expert at the '2nd annual ETFGI Global ETFs Insights Summit - Europe & MEA', held virtually yesterday.

Akber Khan, Senior Director, Al Rayan Investment, gave an overview of the ETFs landscape in Qatar. He said“One of the interesting things about Qatar as an investment destination is the fact that for medium term investors it is a fascinating place because there is so much visibility. To deliver the FIFA World Cup 2022 there has been about $300bn investment that has taken place across many aspects of building the infrastructure.” 

“There is vast increase in LNG expansion and there are dozens of large contracts given to many vendors globally throughout the supply chain. Qatar is the largest exporter of Liquified Natural Gas (LNG) in the world, it produces 77 million tonnes a year and by 2027 is planning to increase the output by 64 percent to 126 million tonnes,” he added. 

Speaking on Al Rayan Qatar ETF, he said, it was the first Shariah-compliant exchange traded fund listed in Qatar. It gives investors exposure to index of Shariah-compliant Qatari equities and is about $150m of assets at the moment. The ETF has a Total Expense Ratio (TER) of 0.5 percent. 

“With the advent of the ETFs the liquidity providers have been getting hired by the individual listed companies to provide liquidity on a single stock basis which helps liquidity of the ETFs and trading liquidity. The improvements to the regulatory infrastructure that came about as a result of the ETFs have significantly improved the overall environment,” Akber added. 

He said, Qatari market traditionally has been a relative bright spot across all of emerging markets.“Qatari equity market has dividend yield of 4 to 4.5 percent as there are no taxes, which in an emerging market context is attractive. Our ETF is the second largest Shariah compliant equity ETF in the world. For us globally the Islamic passive area is a huge area of opportunity because of relative dearth of Shariah compliancy,” he noted.

Talal Samhouri, Senior Portfolio Manager of Aventicum Capital Management, said this is the best time to invest in Qatar as there is expansion of the Foreign Ownership Limit (FOL) to 100 percent. Last time this happened was in 2018 when the foreign ownership limit was lifted to 49 percent and Qatar Stock Exchange was the best performing market in the world, we believe this is a near term catalyst. 

Responding to a question on what led him to decide to list ETFs, he said“We noticed that there is a drive globally towards more passive investments for investors to be positioned into more passive strategies. We were fortunate to handle the indices in the QSE which is the main index. We believe this will be great investment to be held in individual as well as institutional investors. We tried to as much as possible to squeeze the expense ratio.” 

Nick Ogbourne, Product Development Manager at the Qatar Stock Exchange said,“ETFs are very useful because they are not subject to foreign policy ownership restrictions on the stock themselves. We have two more ETFs in pipeline, one is imminent and we expect to see it before end of the year.”

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