New Emerging Markets – UAE and Qatar

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The UAE and Qatar receive upgrades to ‘Emerging Market status’ by Morgan Stanley Capital Investments.

The upgrade facilitates foreign investment in both UAE and Qatar.

Abu Dhabi Stock Exchange building and financial district. Image courtesy of: MDF Group UK

New Emerging Markets.

After a wait of several years, the equity index provider Morgan Stanley Capital International (MSCI) has upgraded the UAE to emerging market, from frontier market status, due to significant improvements in the UAE stock exchanges adopting better market technology and transparency standards. Two of the UAE’s three stock exchanges, Dubai Financial Market and the Abu Dhabi stock exchange, addressed the issues by introducing a delivery versus payment (DvP) model and a so-called false trading mechanism.

UAE upgraded to emerging market status.

The UAE is enjoying strong economic fundamentals, with a swift recovery in the real estate market, which has helped its stock market surge by an impressive 47 percent this year. It has outperformed all markets covered by MSCI — including developed markets.

The UAE failed to win an upgrade last year due to some MSCI requirements related to custody, clearing and settlement.

Qatar upgraded to emerging market status. Qatar’s announcement that two large Qatari banks requested an increase in the number of shares available to foreign investors, helped gain the bid.

Both Gulf countries had been under review since 2009 by the index compiler Morgan Stanley Capital International (MSCI) for a possible upgrade. The upgrade could free-up millions of dollars of funds that invest only in emerging markets. It is estimated that an upgrade would allow the UAE to attract up to USD 370 million in inflows from global funds that track the MSCI emerging market index.

In other markets. Meanwhile, the classification of European Union member Greece was downgraded to emerging market from developed market on grounds of failing to meet criteria of market accessibility. In addition, Morocco’s status was lowered to frontier market from emerging market status due to a downward trend of liquidity requirements. The index also decided to track China A-shares for the possibility of inclusion in the MSCI Emerging Markets Index.

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