Qatar and UAE upgraded to emerging markets by MSCI


Index provider MSCI has promoted Qatar and the United Arab Emirates from ’frontier’ to ‘emerging’ market status.

MSCI revealed its decision in its 2013 Annual Market Classification Review, announcing that they will join the emerging market index in May next year.

Citing reasons for the dual upgrade, the MSCI indicated regulatory improvements in both countries had played a part in the decision making.

MSCI says: “Market participants recognised that the Qatari authorities and the Qatar Exchange have made significant progress in enhancing the operational efficiency of the Delivery Versus Payment model. 

“International institutional investors recognised the improvements made by the Emirati regulator, the Dubai Financial Market and the Abu Dhabi Securities Exchange with respect to the DVP Model. The majority of market participants have expressed no major concerns over the safekeeping of investors’ assets and are starting to move away from the dual account structure.”

The group also relegated Greece from developed to emerging markets and Morocco from emerging to frontier markets.

BlackRock head of emerging markets specialist team and portfolio manager of the Frontiers Investment Trust Sam Vecht says: ”The MSCI decision to upgrade Qatar and UAE from frontier markets to emerging markets reflects a growing realisation of how far these economies and their financial markets have developed in recent years.

“While we welcome the move, it is unlikely to have any significant near-term impact on how we manage our client portfolios. We have been broadly positive on both of these countries for the last two years as the combination of economic restructuring post financial crisis, strong earnings growth, depressed valuations, and high dividend yields offers an attractive proposition.”