Following the recent upgrade of the UAE and Qatar to the Emerging Market status by global markets index provider MSCI, Fortress Investments, a leading investment firm operating in the Middle East, anticipates strong buying activity in both countries’ equity markets, with an estimated capital inflow of US$ 3 billion into the region a year after the upgrade (by June 2015).
The regional financial consultancy said the increased inflows would demonstrate both countries’ success in strengthening their corporate governance standards and boosting the transparency of their financial systems.
MSCI has officially reclassified the MSCI United Arab Emirates (UAE) and MSCI Qatar Indexes from Frontier Markets to Emerging Markets, coinciding with the 2014 Semi-Annual Index Review in May.
As part of the Review, there are no additions but one deletion from the MSCI UAE Index, resulting in nine constituents. The nine companies in the UAE Index are Abu Dhabi Commercial Bank, Aldar Properties, Arabtec, DP World, Dubai Financial Market, Dubai Islamic Bank, Emaar Properties, First Gulf Bank and National Bank of Abu Dhabi.
“This upgrade will whet the appetite of investors who follow the MSCI ratings, involving potential assets of $8 trillion,” said Hamed Mokhtar, Managing Director at Fortress Investments. “This will further strengthen the UAE’s position as a magnet for global investor funds, helping the country to boost liquidity in the local market through increased inflow of foreign funds.”
There was strong buying activity on both the UAE and Qatar equity markets following both countries becoming part of the MSCI EM index – as large fund managers have started deploying their passive funds, thus raising the traded volumes above the average levels. Also, purchases are being concentrated on the stocks newly included in the MSCI, 9 names in the UAE and 10 in Qatar.
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