The UAE has earned its long-awaited upgrade to emerging market status on the leading international investment metric, the Morgan Stanley Capital International index (MSCI).
The compilers of the index issued a statement earlier today saying they’d decided to promote both the UAE and Qatar to Emerging Market status from Frontier Markets.
MSCI said institutional investors around the globe recognised the improvements made by the UAE regulator and its bourses in settling trades.
As expected, local investors responded to the news with trade increases.
“It’s a big jump compared to yesterday,” said Fadi El Ghattis, a senior lecturer at the Emirates Institute for Banking and Financial Studies.
“In Abu Dhabi’s exchange it was round 2.5%, in Dubai 1.6%. In Abu Dhabi it was actually the highest jump in one day in the market since September 2009,” said El Ghattis.
The UAE and Qatar first applied for an upgrade to emerging markets status in 2008 and had been denied entry to the group five times.
The managing director of the Dubai Financial Market, Essa Kazim, says while it’s welcome, it’s also well-overdue.
“We are delighted to see the UAE market upgraded to Emerging Markets status, which reflects international investors’ confidence in our markets and their satisfaction with what we have accomplished,” said Kazim.
“This development is overdue in light of the market infrastructure improvements made and ticking of all upgrade requirements a long time ago.”
“The reignited interest of local and foreign investors towards DFM since the beginning of the year underlines that what we have implemented caters to investors’ expectations”
Fadi El Ghattis expects the upgrades for the UAE and Qatar will have a flow-on effect throughout the region.
“We have mainly 3 strong markets in the GCC, the UAE, Qatar and Saudi Arabia.
“Of course Saudi Arabia is the biggest, we cannot compare any other markets even the whole Middle East to Saudi Arabia, but of course it will have a positive impact on the whole of the GCC.”
Morocco however, has been downgraded to frontier market after several years of liquidity problems and officials say Egypt is effectively on-notice, as they have a keen eye on problems with their foreign exchange market.
In another big adjustment to the index, Greece has been downgraded to Emerging Market status from Developed Market, following its economic collapse.
All changes will take officially take effect in May 2014.
Originally broadcast on Emirates News, 12 June 2013