Increased liquidity also promotes market stability and resilience, making Qatar an even more favourable investment destination.
The Qatar Investment Authority (QIA) made a significant commitment to allocate up to 1 billion riyals ($275 million) toward a market-making programme aimed at enhancing liquidity, according to Reuters.
The sovereign wealth fund, valued at $445 billion, said it will provide a commitment that encompasses 90% of the market capitalisation listed on the Qatar Stock Exchange over the next five-year period.
By committing substantial resources to enhance liquidity, QIA aims to attract both domestic and international investors and in turn bolstering the attractiveness of the local market. Increased liquidity also promotes market stability and resilience, making Qatar an even more favourable investment destination.
As one of the world’s largest sovereign wealth funds, QIA holds a significant portfolio of domestic and international investments. Its commitment to the local market-making programme reflects its long-term vision and commitment to the growth and development of Qatar’s financial sector.
Furthermore, the increased liquidity can facilitate the launch of new financial products and services, fostering innovation and diversification within the local market.
The availability of ample liquidity encourages the listing of more companies and the growth of existing ones, ultimately contributing to the overall development and expansion of the economy.
Market-making involves creating a more liquid trading environment by facilitating the buying and selling of securities, thereby reducing transaction costs and improving overall market efficiency. This initiative is expected to attract more participants, boost trading activity, and create a favourable ecosystem for investors, traders, and businesses operating in Qatar.
Liquidity plays a crucial role in the smooth functioning of financial markets. It allows for efficient price discovery, reduces bid-ask spreads, and enables investors to execute their trades quickly and at fair prices.
Qatar, unlike its neighboring countries Saudi Arabia and the United Arab Emirates, did not witness the same surge in initial public offerings (IPOs) last year.
Market experts attribute this lack of IPO activity in Qatar to the influence of the coronavirus pandemic and the country’s concentrated efforts on organising last year’s World Cup.
In January, Qatar’s stock exchange experienced its first IPO in nearly three years with the introduction of IT services firm MEEZA.
This milestone occurred as a result of new regulations that permitted companies to gauge investor interest and establish pricing by offering a price range.
