After failing to gain recognition as emerging markets for the past five years, both Qatar and the United Arab Emirates (UAE) have upgraded from frontier market to emerging market status. The MSCI World, stock market index with over 1,600 world stocks, uses stock gauges tracked by investors with about 7 trillion dollars in assets. Additionally, MSCI tracks economic growth, trading volumes and market accessibility to assess market categories. In this instance, the UAE and Qatar gained an upgrade to emerging markets due to continuous economic progress and thus the nations’ equities have been luring more of the investor assets that follow MSCI’s gauges. This upgrade from frontier markets have marked a new era for both countries in terms of capital flows which are facilitating more access to funds from all over the world.
Both UAE and Qatar have been lobbying for a long time to receive this upgrade to emerging market status, in hopes that it will encourage more foreign investment into the two countries to stimulate the economies further. One reason why these countries pushed so aggressively to upgrade to emerging market status, is because fund managers have placed approximately 1.5 trillion dollars annually, into emerging market assets.
Analysts believe that the status upgrade will make UAE and Qatar shares much more attractive to the international investment community. And as a result of this, it is hoped that more investors will start to buy shares within the two countries, which will stimulate their economies even further and creating more investments and business opportunities for investment-seekers. In addition, this promotion to emerging market status will also attract a broader range of investors and thus will place UAE in position to become one of the largest markets, enjoying extremely high amounts of foreign investment. This year alone, UAE's stock market in Dubai is among the top performing in the world, increasing almost 50 percent on the expectations of speedy economic recovery. Additionally, the Qatari market has increased almost 15 percent.
Oppositely, MSCI World has also announced that Greece received a downgrade after the stock market decreased approximately 90 percent since the financial crisis began. Lastly, it is evident that UAE and Qatar are far from other Middle Eastern countries, as most of them are still attempting to resolve domestic conflict and find their economic footing. With that being said, it is recommended that investors pay close attention as these two countries continue to emerge, prosper and contribute to economic growth; all over the world.