Business and Finance

Qatar’s transfer of control of its stock exchange to NYSE Euronext (NYX.N: Quote, Profile, Research, Stock Buzz) (NYX.PA: Quote, Profile, Research, Stock Buzz) is part of a modernization drive that will jolt rivals in the booming Gulf Arab region to follow suit.

The family ruled state is the first in the Gulf to sell part of its domestic bourse in a region where exchanges fall short of international accounting and reporting standards and are dominated by individual investors, heightening market volatility.

Qatar’s surprise sale of 25 percent of the Doha Securities Market for $250 million and surrender of management control demonstrates the challenges facing the region, whose surplus petrodollars have often been invested in Western companies.

Regional bourses, and regionally-listed companies, are often not as attractive to international or domestic investors as other markets — established and emerging — and are under pressure to improve.

The Qatar deal increases pressure on neighbors such as Kuwait and Abu Dhabi to consider similar measures or lose out in the race to become the leading regional exchange.

“It will definitely encourage other markets to have the best practices from around the globe,” said Faisal Hasan, head of research at Kuwaiti investment bank Global Investment House instant payday advance. “Aligning with international exchanges is already a trend.”

Dubai last year agreed to sell 33 percent of its Dubai International Exchange (DIFX) to Nasdaq OMX (NDAQ.O: Quote, Profile, Research, Stock Buzz). Dubai had set up the DIFX in 2005 to operate according to international standards and attract regional initial public offerings, but since then only 14 companies have listed stock on the exchange, of which just three are primary listings.

On at least two occasions companies have dropped plans to sell stock in IPOs and list on the Dubai exchange, one as recently as May. 

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