United Arab Emirates and Qatar have shot up in the financial world as both nations have gained a higher market status.
Index compiler Morgan Stanley Capital International (MSCI) has changed the grading of both nations from frontier to emerging markets.
Stock markets in both countries soared on the news, which was not unexpected by investors and bankers.
The Qatari Doha exchange hit a new record, exceeding the previous peak set in September 2008, while the Dubai exchange has rocketed by 45% in 2013, setting the mark as one of the world’s best performing stock markets.
Analysts and fund managers were on a high as the news broke.
Israeli disappointment
“It’s taken a while but we have finally got there,” said Georges Elhedery, head of Global Markets MENA at HSBC. “The upgrading puts the region firmly on the map as somewhere with growth potential for big institutions looking to invest globally.”
The UAE and Dubai in particular has lobbied for emerging market status for some years, but has faced continuing rejection from MSCI.
Although the revision of market status has been announced, the change in status will not take place until May 2014.
Nevertheless, both markets have returned good results over the past 12 months and are likely to make further gains.
The MSCI change of heart is put down to improved corporate governance and investor relation expectations.
Other exchanges that were re-evaluated included Tel Aviv, Israel, and Greece.
The Israeli exchange lost a bid to cross from the Middle East to Europe index, which disappointed the market as the European market is better regarded.
Greece downsized
Greece was downgraded to an emerging market following the sovereign debt crisis and impact of austerity measures over recent years.
The market is the first developed nation downgraded to emerging status and follows an 83% dip during the past five years.
On the other hand, since January 2012, Israel’s TA-25 exchange has turned in better results than the FTSE100, the French CAC40, German Dax and the MSCI EM emerging markets index.
Indeed, some large technology companies are considering launching on the Israeli exchange in favour of some more traditional venues like New York and London.
MSCI also downsized Morocco to a frontier market, maintained South Korea and Taiwan as emerging markets, and put a decision about Chinese shares traded on local exchanges on ice for the time being.
