MSCI Emerging Markets Upgrade for the UAE and Qatar: Likely Effects

Published on October 18 2014 by Zachary Cefaratti

http://www.wattpad.com/76696054-msci-emerging-markets-upgrade-for-the-uae-and

MSCI Emerging Markets Upgrade for the UAE and Qatar: Likely Effects Written by Zachary Cefaratti - Risk Officer at Dalma Capital Management Limited, a DFSA regulated Hedge Fund Manager in DIFC The decision by MSCI to upgrade UAE and Qatar to Emerging Markets status from Frontier Markets status is likely to have profound, positive effects on domestic equity markets. The upgrade will cause the investor base in domestic equities to broaden widely and could significantly increase liquidity of domestic stocks, such as DP World. There are several factors that will cause these positive effects - firstly, Exchange Traded Funds (ETFs’) that track indices are highly popular investment tools utilised by investors around the world, primarily in the United States and Europe. BlackRock, the world’s largest asset manager, operates 18 ETFs that track MSCI Emerging Markets under the iShares brand. The combined average daily trading volume of iShares’ Emerging Market ETFs exceeds $3 billion and combined assets under management exceeds $44 billion, which compares to only $11 million daily trading volume and $825 million under management for the single iShares equivalent Frontier Markets ETF. This means that constituency in the MSCI Emerging Markets countries should automatically create increased liquidity and a broader investor base for the UAE and Qatar.