Qatar upgraded to emerging market in MSCI’s index

by  — 12 June 2013

MSCI has upgraded Qatar and the UAE to emerging market status.

The MSCI Emerging Markets Index, which tracks USD7.3 trillion (QAR26.57 trillion) of equities around the world, is considered the premium list of growing markets, including countries such as China, Brazil and India.

Qatar’s and the UAE’s upgrade to an emerging market from a frontier one in the index is expected to take effect on May 31, 2014. “The majority of market participants have expressed no major concerns over the safekeeping of investors’ assets,” MSCI said. Qatar would account for 0.45 percent of the weighting of the Emerging Markets index, with the UAE accounting for 0.4 percent, Remy Briand, MSCI’s managing director and global head of index research, said shortly after the announcement.

Stock markets in Qatar and the UAE rallied to multi-year highs after MSCI upgrade announcement came.

Implications of upgrade

This upgrade is expected to channel fresh foreign investments to Qatar, which some analysts fear might open the doors to large investors from outside the borders of Qatar taking ownership positions in leading corporates such as Industries Qatar, QNB and other high-quality shares.

MSCI said it welcomed the progress made in raising limits on foreign ownership of companies listed on Qatar Exchange, though it said that Qatar’s 25 percent limit on overseas ownership was still set too low by emerging-market standards.

Qatar Exchange welcomed the decision of the MSCI to upgrade the Qatari market, describing this decision as a positive step towards the development of Qatar Exchange and a milestone that will attract further foreign investments to the Qatari stock market. Rashid bin Ali Al Mansoori, CEO of Qatar Exchange, expressed his satisfaction to upgrade the rating of the Qatari market to emerging market, which he said clearly reflects the recognition of the positive steps made by Qatar Exchange over the past years to meet the MSCI requirements.

Qatar Exchange was unavailable for comment on the upgrade coming into effect from May 31, 2014 and whether the country will remain on frontier market status until then. It remains to be seen whether the exchange sees a spate of listings in the period between now and May 31, 2014.

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