UAE, Qatar gain momentum in the run up to emerging status verdict

UAE, Qatar gain momentum in the run up to emerging status verdict

UAE and Qatar get another chance at making the grade for the coveted ’emerging market’ status on MSCI’s index. Will they make use of the six months breathing space?

June 22, 2011 2:50 by Precious de Leon

The UAE and Qatar get to live another six months as ‘frontier markets’ in the eyes of Morgan Stanley Capital International (MSCI) Index. The news that index provider MSCI will extend the review period for reclassification must come as a sigh of relief for most of the people glued to this issue, Kipp thinks, since it was nearly evident the Qatar wasn’t going to cut the muster while UAE was only barely-possibly-hopefully going to make it.

“I don’t think investors in either markets were expecting an upgrade so this is a favorable outcome,” Arindam Das, head of HSBC’s securities services for Middle East, North Africa was quoted in a Reuters article.

So the two countries have got till the end of the year to get their stations in order. By then UAE’s Investment Map will have been one month into its November launch, for one. And who knows, maybe Qatar will eventually convince firms to raise the limit for foreign ownership from 25 percent to at least UAE’s limit of 49 percent—the MSCI prerequisite.

It definitely feels like extra cramming time for a final exam, and how appropriate it is that it’ll be at the threshold of 2012. A new year, a new status would certainly be a welcome reason for celebration. A new year that will hopefully bring in some much needed injection of liquidity to the UAE markets.

MSCI said the extended time period for the review will provide ample time for market participants to assess the impact of a newly introduced settlement system. The delivery versus payment system, a requirement made by the index provider, is a procedure in which payment for a security must be made when the security is delivered. Usually, the payment is made to a bank, which in turn pays for the security, according to The National.

Whatever the real reason for the delay is, it’s clear that next six months will be crucial for both the UAE and Qatar to whip its markets into shape.