Market index compiler MSCI announced that 10 Qatari stocks and nine stocks from the UAE are being added to its emerging markets index.
In a release posted late on Wednesday, MSCI revealed that the three largest additions to the MSCI Emerging Markets Index measured by full company market capitalisation will be Qatar National Bank, Industries Qatar and National Bank of Abu Dhabi.
Companies selected from the UAE include: 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.
Not surprisingly, five of the 10 stocks selected from Qatar included banks: Al Rayan Bank, Barwa Real Estate, Commercial Bank of Qatar, Doha Bank, Ooredoo (telecoms), Qatar Electricity & Water, Qatar Industries, Qatar Islamic Bank, Qatar National Bank and Vodafone Qatar.
Most experts had predicted that companies with larger market cap, with appropriate free float and foreign ownership levels would most likely be included.
“This is a great opportunity for those companies to further develop their investor relations programmes,” said Peter Gotke, managing director of Depositary Receipts UK, Ireland and the Middle East, BNY Mellon.
MSCI had first announced in June last year that the two Gulf states would be upgraded from frontier to emerging markets during its May 2014 Semi Annual Index Review. The news has already had a significant impact on the markets, with the Dubai Financial Market in particular outperforming regional markets. All three markets – Dubai, Abu Dhabi and Qatar – rose on Tuesday, with Qatar reaching a new all-time high.
“The upgrade is a key step for the UAE and Qatar, but not the final step by any means,” said Gotke. “Their rise will bring the broader region into sharper focus amongst global investors, including KSA, which has been rumoured to be under consideration for its own upgrade. Of course, the foreign investors are the constituency of the MSCI and it is their vote that decides on what countries should be upgraded – ease of access is, of course, a key consideration in this decision-making process.