UAE and Qatar upgrades to boost Mena funds

UAE and Qatar upgrades to boost Mena funds

Investment professionals believe the decision by MSCI to add its UAE and Qatar indices to the wider MSCI Emerging Market universe will lead to large changes across the region, a new survey by Insight Discovery and Zawya has found.

The survey of 141 financial services industry professionals working within Mena, of which 60% were based in the UAE, found the reclassification of UAE and Qatar as Emerging Markets was universally expected to boost funds in the region.

The survey also found that Kuwait or Oman was thought to be the next country to be elevated to Emerging Market status, with about a third of respondents tipping each. The vast majority (80%) also believed the UAE and Qatar's elevation would speed up the Saudi Arabian Tadawul stock market being reclassified.

It was widely believed that international and local/regional asset managers would benefit from the elevation of the MSCI UAE and Qatar Indices, although almost half felt this might contribute to an asset price bubble forming somewhere in the GCC region within the next three to five years.

Insight Discovery said about a quarter of those polled expected the elevation of the two countries to lead to an extra $1bn in annual asset flows, while 23% said they thought the revised status would add between $500m $1bn of new inflows a year.

The majority of respondents (58%) said the main beneficiaries of the increased interest in the region would be international asset managers with a local presence that offer regional funds, while a third (33%) said local/regional asset management companies would benefit the most.

Only 9% believed international asset management firms without regional presence but which offered regional funds would be the main winners.