Apr 25 2011 |
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UAE and Qatar may attract USD1.74b funds
By Muzaffar Rizvi DUBAI - The UAE and Qatar's stock markets would be 'too small to matter' if upgraded to emerging-market status at index provider MSCI Inc, a report said.The combined weighting of the two markets in the MSCI Emerging Markets Index would be 0.35 per cent, Credit Suisse said on Sunday.
"In the case of upgrade to MSCI emerging market, Qatar would account for 0.22 per cent and the UAE just 0.13 per cent of the total index," the Swiss investment bank said in its MENA equity strategy report.
From an Europe Middle East and Africa (EMEA) perspective, Qatar and the UAE account for almost two per cent of the MSCI index, the report further said while giving 1.22 per cent weighting to Qatar and 0.75 per cent to the UAE.
Credit Suisse report also estimated potential inflow of funds towards Qatar and the UAE in case of up-gradation to emerging market status.
"The initial estimates indicate potential inflow of funds into the Qatar and the UAE to the tune of up to $1.74 billion, with Qatar receiving over $1 billion while the UAE getting around $663 million," the report said.
With the implementation on Delivery versus Payment, or DvP, system in local exchanges, the chances of possible upgrade have been increased despite the stringent foreign ownership limit in the two countries.
UAE bourses will start the DvP system on April 28 in a bid to boost its chances for an upgrade at MSCI Inc, that will attact more international mutual funds in the country. MSCI will decide in June its assessment of the markets by examining, among others, economic development, trading volumes and market accessibility.
Impact and stocks to benefit
The full impact on the two countries would be around five per cent of total free float, with the UAE enjoying higher positive impact at 10 per cent of total free float, compared to only 3.6 per cent for Qatar, the report said adding that potential inflows into the UAE would be concentrated into fewer names.
" Emaar Properties PJSC, DP World Limited and Dubai Financial Market PJSC are possible stocks from the UAE that may be added to the gauge," the Credit Suisse said.
From the Qatar side, seven stocks namely Qatar National Bank SAQ, Rayan Bank , QIB , Barwa Real Estate , Doha Bank QSC, Qatar Gas Transport and Qatar Navigation may be added to the index, it said.
© Khaleej Times 2011
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