The deal will see the DSM, whose listed companies are valued at approximately $136bn, working with the NYSE Euronext to build a new cash and derivatives exchange.
It gives the DSM access to all the latest technology and, coupled with the country’s vast oil and gas reserves, cements it as a stable, attractive proposition for international investors.
The kudos of partnering with the NYSE brand is hard to underestimate, as the deal will allow companies the opportunity to cross-list across the exchanges.
DSM and NYSE Euronext will cooperate to develop a new cash and derivatives exchange in Doha.
But it was not just the NYSE that was among the final candidates. The London Stock Exchange (LSE) and the Deutsche Borse, amongst others, hung on grimly until the end in the hopes of securing the agreement.
The City’s hopes were fuelled by the fact that Doha already holds a 15.1% share in the market, when Qatar came to the rescue in time to stave off a Nasdaq bid for the LSE.
In a further twist, regional rival Dubai holds a 19.9% stake in the Nasdaq and just over 20% of the LSE. Nasdaq, in turn holds a 33% stake in the Dubai International Financial Exchange.
The deal places the DSM in the ideal position from which to launch its drive to become the regional financial capital.
As one of the few local exchanges with international backing (the Abu Dhabi Securities Exchange signed a strategic alliance with NYSE Euronext earlier in the year but no equity shares were involved), DSM has won the current round of one-upmanship with the Dubai bourse as each vies for global recognition.
It is easy to see why Doha found it so easy to attract international interest. Qatari companies reported profit increases of 72% year-on-year based on Q1 results.
The national economy is also set to grow at 12% per annum (excluding potential revenue increases from energy sector exports) for at least the next five years. Increased liquidity from oil revenues is also set to play a major part in the state’s continued investment and consolidation.
Qatar, through bodies such as the Qatar Investment Authority (QIA), has also been widening its international portfolio in a range of high profile agreements, over and above the landmark real estate purchases.
At the end of last month the group ploughed $3.5bn into buying a 7.7% stake of UK banking giant Barclays.
Furthermore, despite a loss on its original investment estimated at over $1bn, during the same period QIA bought a further seven million shares in supermarket chain J Sainsbury, bringing the total holding to 25.3%. This was then increased to a 26% stake with the purchase of 12.36 million shares at the beginning of July.
In Europe the group has cleverly taken advantage of difficulties brought about by Western financial groups’ sub-prime losses to buy a 7% share of global powerhouse Credit Suisse.
The international interest in partnering with the DSM, in part the result of the brand recognition these deals have brought to Qatar, shows that Doha’s time in the global financial spotlight may be just beginning.
How great the rewards of the partnership are will be measurable when the DSM opens itself to public bids by floating its own IPO – something which is almost certain to happen long before the GCC single currency finally arrives.
Sunday, July 6- 2008 @ 16:55 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.