NYSE Euronext (NYX) bought a 20% stake in a stock exchange in Qatar for $200 million, scaling back on its initial plans for a bigger entry into the oil-rich Middle Eastern markets.
The partnership between NYSE Euronext and Qatar Holding will replace the Doha Securities Market with the newly created Qatar Exchange.
Gulf countries have been booming over the past decade but they have not been absolutely resilient to the recession either. Thus, stock exchanges in the Middle East have seen lower-than-usual trading volumes recently. Industry experts believe this led NYSE Euronext to downsize its plan of a $250 million investment and a 25% stake in the new exchange.
Yet, this is the largest investment the company has made in a foreign exchange till date. NYSE Euronext has been looking for alternative sources of revenue as it faces increasing pressure from new trading platforms in the U.S. and Europe. While the Qatar investment is not likely to help the world’s largest exchange operator in the short term, it has now found a foothold in one of the fastest growing areas in the world.
According to reports, Qatar is expected to emerge as the second-largest economy in the Gulf Cooperation Council by 2015. If NYSE Euronext can expand further in the Middle East, it should be well positioned to reap benefits in the long run.
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