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WorldAugust 1 2014

UAE and Qatar move up the investment status ranks

Having been upgraded from frontier to emerging market status by Morgan Stanley Capital International, Qatar and the United Arab Emirates are certain to see increasing levels of investor interest, but they are also likely to be confronted with some new challenges.
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In June this year, Qatar and the United Arab Emirates (UAE) were upgraded from frontier to emerging market status by index provider Morgan Stanley Capital International (MSCI). This elevation, which had been under review since 2008, is a significant boon for both countries’ economic trajectories. Not only has it opened up their respective exchanges to a new investment universe, it will substantially increase liquidity in these markets over the coming months and years. Moreover, the prospects for increased transparency and corporate governance in both jurisdictions are now brighter.

However, the upgrade will also present challenges. Both countries are now competing against larger and potentially more attractive emerging market economies, including India and Brazil, in a more competitive investment space. Moreover, the demands for widespread regulatory and institutional reform will increase as this international investor base becomes more sophisticated. Meeting these challenges will be demanding over the medium term. However, if this opportunity can be seized, the development opportunities will be significant.

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