Dec 05 2011 |
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UAE stocks rally with 10 days to go for MSCI verdict on upgrade
By Vicky KapurUpgrade could see foreign funds inflow of up to $1.7 billion into UAE and Qatar markets
The Dubai Financial Market 's General Index hit a five-week high, climbing back above the 1,400 levels, while both the Abu Dhabi Exchange and the Qatar Exchange made two-week highs as volumes continued to improve. MSCI, or Morgan Stanley Capital International, whose stock indexes are tracked by investors with trillions of dollars in assets, is scheduled to release the results of the market classification review for the two markets on December 14, 2011.
On the DFM , trading volumes and value surged more than 92 and 75 per cent, respectively, with 142.8 million shares worth Dh179.4 million changing hands on Sunday, compared with 74.2 million shares worth Dh102m on Tuesday, November 29, 2011. The surge in trading is a clear sign that investor sentiment was buoyed by the increased likelihood of UAE bourses obtaining the emerging market status.
In June, MSCI had extended by six months the review period for the potential reclassification of the UAE and Qatar markets from Frontier Market to Emerging Market status "in order to give additional time for market participants to assess the impact of the enhancements implemented earlier this year" on the two markets.
The three UAE stock markets - DFM , ADX and Nasdaq Dubai - together have a combined market capitalization of around $123 billion while the Qatar Exchange's market cap stood at more than $124 billion at the end of November 2011.
An upgrade of the UAE and Qatar is likely to draw more investors as fund managers buy their shares to mirror MSCI's indices. According to Credit Suisse, the two markets are estimated to see an equity funds inflow of up to $1.74 billion in the event of an upgrade. With $1 billion in estimated additional funds flow, Credit Suisse expects Qatar to be a bigger beneficiary of the move, while the UAE stands to gain more than $650 million, according to the bank's estimates.
© Emirates 24|7 2011
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