| Kippreport.com

UAE and Qatar not granted ‘emerging markets’ title by MSCI

June 21, 2012 5:40 by Priyanka Pradhan

The Morgan Stanley Capital International (MSCI) committee has, for the fifth time, rejected UAE and Qatar from being considered ‘emerging markets’.

In the case of UAE, the MSCI said that the country meets all requirements besides specific market accessibility issues related to custody and clearing and settlement. The body stated, “The regulator, the Dubai Financial Market and the Abu Dhabi Securities Exchange have taken the decision to delay the implementation of a proper false trade mechanism.”

As for Qatar, MSCI stated that the country has still not addressed the specific issue of very low FOL levels.

The news brings immense disappointment to the UAE and Qatar governments, who were optimistic about their chances this time. Their inclusion into MSCI’s emerging markets indexes was expected to bring billions of dollars of investments into their stock markets.

The two countries will remain in the ‘frontier markets’ category, which implies that their economies are investable, but have lower market capitalization and liquidity than ‘emerging markets’. UAE and Qatar have been vying to be considered as emerging markets since 2009, to be able to show to potential investors that they are in the process of rapid growth and industrialization.

The next review by MSCI will be in a year, when UAE and Qatar will hope to join other emerging markets such as India, Turkey, China, Russia and Brazil, amongst others. However, unless the core issues are taken care of, the two cash-rich gulf countries will be kept waiting in the wings.

 

Kipp doesn’t want to do this, but “we told you so…”