Text size:

  • Small
  • Normal
  • Large

What was all the fuss about and what does MSCI stand for?

What a reclassification means for markets.

Let's start from the beginning.

What is MSCI?

The acronym stands for Morgan Stanley Capital International, which compiles influential indexes tracked by thousands of fund managers. MSCI's indexes cover thousands of stocks under various categories and are used as benchmarks to measure the performance of portfolios.

What was all the fuss about?

The UAE and Qatar were under a review for a potential upgrade to "emerging" market status, from "frontier". Such an upgrade could lead to an influx of billions of dollars worth of investment.

Would this money have been invested straight away?

No. Very little happens on the same day country classifications change. Fund managers actually have a year to decide how to allocate funds to the newly classified markets.

What is the difference between frontier and emerging markets?

Emerging markets include some of the most dynamic and fastest- growing economies in the world, such as China, India and Brazil. They are considered more stable and better regulated, and therefore draw more international investment. Frontier markets include countries that are just beginning to open up to investors outside their domestic market, such as Kazakhstan and Vietnam. Regulation tends to be weaker and the markets are subject to sharper swings, keeping a lot of investors at bay.

Didn't another index compiler upgrade the UAE to emerging?

Yes, in September, the FTSE Group categorised the UAE as a "secondary emerging" market under a slightly different criteria than the one used by MSCI. It still classifies Qatar as a frontier market. Analysts say because more assets are tracked to MSCI's indexes, an upgrade by MSCI carries more weight.

Why did the UAE and Qatar not get the upgrade this time round?

Limits on foreign ownership is one factor, as the UAE permits outsiders to own only 49 per cent of a company's shares, except for in its free zones, and Qatar has a limit of 25 per cent. Also, MSCI required the bourses to implement a new settlement procedure for trades. That has mostly been done but MSCI said it was still watching to make sure the new system was working smoothly.

When is the next review planned?

MSCI usually reviews its classifications only once each year but said in this instance it would evaluate the UAE and Qatar again in December.

Back to the top

More articles

Editor's Picks

 Marina Square apartments Reem Island: Q1 2% rise. Studio - Dh65-68,000. 1BR - Dh75-95,000. 2BR - Dh110-145,000. 3BR - Dh170-190,000. Q1 2013-Q1 2014 no change. Sammy Dallal / The National

In pictures: Where Abu Dhabi rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Abu Dhabi have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 A Brabus Mercedes 6x6 Sports Utility Vehicle is readied for display during Auto China 2014 in Beijing, on April 20. Adrian Bradshaw / EPA

In pictures: Auto China 2014 exhibition

Leading automakers have gathered in Beijing for the kickoff of China’s biggest car show, but lacklustre growth and environmental restrictions in the world’s largest car market have thrown uncertainty into the mix. More than 1,100 vehicles are being showcased.

 The New York Stock Exchange. Rising interest rates will shift momentum away from bonds and back towards risk assets such as stocks. Richard Drew / AP Photo

Plan ahead for rising interest rates

It is now over five years since the majory central banks slashed interest rates to record low but that is all about to change. So, how will rising interest rates affect you?

 The Wind, Energy, Technology and Environment Exhibition takes place from April 14 to April 16. Above, the Dewa showroom during last year’s Wetex. Jaime Puebla / The National

April corporate and economic calendar for the UAE and overseas

From Cityscape to Wetex to stock-market holidays to nations reporting first-quarter GDP figures, here is our helpful calendar of April's business events in the UAE and internationally.

 The Greens, villas: Q1 no change. 3BR - Dh210-250,000. 4BR - Dh210-260,000. 5BR - Dh220-300,000. Q1 2013-Q1 2014 5% rise. Pawan Singh / The National

In pictures: Where Dubai rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Dubai have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 Get the latest information on credit cards, bank accounts and loan products in the UAE. Mark Lennihan / AP Photo

Rates report: Latest on UAE loans, accounts and credit cards

Souqamal.com brings you the latest interest rates on banking products in the UAE.


To add your event to The National listings, click here

Get the most from The National