|Bid||0.00 x 1000|
|Ask||242.43 x 800|
|Day's Range||241.19 - 243.49|
|52 Week Range||134.28 - 246.36|
|Beta (3Y Monthly)||1.33|
|PE Ratio (TTM)||37.21|
|Earnings Date||Aug 1, 2019|
|Forward Dividend & Yield||2.32 (0.95%)|
|1y Target Est||244.50|
(Bloomberg) -- First Abu Dhabi Bank PJSC proposed removing a cap on the foreign ownership limit in its sharers after the United Arab Emirates started loosening rules to attract international investors.The board’s proposal is subject to the supervision of regulatory authorities and would require amendments to the current laws and policies, the nation’s biggest bank said in a statement. The move has "the potential that other public companies in the U.A.E. may apply similar measures," it said.This “is positive news for U.A.E banks as it may allow international banks to take strategic stakes in local lenders, especially for the mid to small sized lenders that are underperforming,” Edmond Christou, a financials analyst with Bloomberg Intelligence, said by email. “This is likely to bring new skills, speed up digital transformation with knowledge sharing and international investments.”The U.A.E. said this month it’ll allow foreigners to own 100% of businesses across industries. The federal government will leave it to individual emirates to “decide the ownership percentage in each activity according to their circumstances,” said Prime Minister Sheikh Mohammed Bin Rashid Al Maktoum.Foreign InflowsIf publicly traded companies in the U.A.E. allow foreigners to own 100% of their shares, it could attract about $4.5 billion in inflows from passive trackers of MSCI and FTSE indexes, according to EFG-Hermes equities strategist Mohamad Al Hajj. If active investors follow, that amount could double, he said. The U.A.E., the second-biggest Arab economy, currently caps foreign ownership of businesses at 49%, except in so-called economic free zones. First Abu Dhabi Bank’s shareholders in February approved raising its foreign ownership limit to 40% from 25%.First Abu Dhabi Bank’s proposal comes after the market regulator in neighboring Saudi Arabia removed the limit of ownership of publicly traded companies for foreign strategic investors. While the Saudi market watchdog has removed the cap, limits by other regulators or a company’s own rules still apply.First Abu Dhabi Bank in May asked MSCI Inc. to clarify its decision not to increase the lender’s weighting on its MSCI EM index. The index compiler’s CEO said in an interview in March that a strategic stake controlled by Abu Dhabi’s royal family was an obstacle for higher weighting.FAB shares closed unchanged on Wednesday. They’ve risen 6.4% so far this year, compared with a 3.4% gain in the exchange’s benchmark index.The bank also reported second-quarter profit on Wednesday that topped analysts estimates. Click here for more\--With assistance from Filipe Pacheco.To contact the reporter on this story: Arif Sharif in Dubai at email@example.comTo contact the editors responsible for this story: Claudia Maedler at firstname.lastname@example.org, Shaji MathewFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Even as earnings estimates rebound across emerging markets, one sector is doggedly going from bad to worse: information technology.The first five months of 2019 saw the average profit projection for developing-nation companies tumble about 7%, with the biggest drag being IT firms, whose estimates sank 29%. And when the tide turned and forecasts for emerging markets as a whole rose 1.7% in the past seven weeks, technology companies failed to catch up -- their estimates have fallen a further 2.3%.Analysts are skeptical of the outlook for the information technology subgroup even as they grow bullish on commodities and energy stocks, which are sensitive to the ongoing trade conflicts between the U.S. and China. Emerging-market IT firms have seen their average earnings fall in the second quarter by the most since 2015, which put a rude end to the exuberance of past years, when IT firms drove the equity rally and became the biggest subgroup in the MSCI Emerging Markets Index.Now the relative weight of the IT industry in the gauge has halved to under 14% compared with January 2018, both as a result of its underperformance and a rebalancing of the index by MSCI Inc. which saw several high-profile companies move to other indexes. The result is that the importance of IT companies to emerging-market equity performance has waned.That doesn’t mean the technology sector has nothing to recommend it. Despite weaker earnings in the second quarter, the average profit at emerging-market IT firms is above estimates made 12 months ago for this time. With the steep cuts the segment is witnessing this year, some investors may bet analysts are far too pessimistic.The MSCI EM Information Technology Index has rallied 12% this year, compared with a 9.3% gain for the broader emerging-market gauge. This superior momentum may impress analysts only if the third-quarter earnings show an advance to make good for the 12% earnings plunge in the April-June period.To contact the reporter on this story: Srinivasan Sivabalan in London at email@example.comTo contact the editors responsible for this story: Dana El Baltaji at firstname.lastname@example.org, Alex NicholsonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Kuwait has delivered more gains for stock investors than any other major market in the Middle East and Africa this year. But, after a rally driven mostly by bets on an anticipated upgrade, some traders sound ready to take their money elsewhere.The oil-rich Gulf nation’s $103 billion stock market, similar in size to Ireland’s, has surged more than 40% in the past two years amid increasing expectations of an MSCI Inc. promotion to emerging from frontier status. The New York-based index compiler obliged last month, saying the elevation will happen in 2020 pending some local enhancements and spurring a rally that lasted more than two weeks.Lenders, regularly lauded by analysts as among the most resilient in the region, led gains that are now tempting some investors to take profit. The Premier Market index, composed of 19 of the biggest and most liquid shares, fell in two of the four sessions this week. It rose 0.2% on Wednesday, extending its advance in July to about 6.1%.Kuwait is trading “well ahead of its typical valuation,” with a “near all-time low in dividend yields,” said Adam Choppin, an investment officer at FIS Group in Philadelphia. An expected rate cut by the U.S. Federal Reserve is likely to put pressure on the dollar, which will flow through to the Kuwaiti dinar, he said. Plus, most foreign funds positioning for the upgrade are already in place, according to Choppin, who started the year with a neutral call on the country after being overweight in 2018.“This feels like a good point to cash in any gains,” he said.Here’s where Kuwaiti stocks stand, illustrated in four more charts:Foreigners have been major net buyers since mid-2017 as anticipation around upgrades increased. Local authorities stepped up reforms in the past two years, aiming to earn the promotions and attract international traders. The efforts started to pay off last year when FTSE Russell elevated Kuwait to emerging-market status.A London-listed ETF focused on Kuwait attracted record inflows in the week last month when MSCI made its announcement on the Gulf nation’s status.The decision has led some investors to question whether Kuwait will become a small fish in a big pond once the upgrade is implemented, reducing it to a blip on global investors’ radars. It is currently the largest member of MSCI’s frontier markets benchmark, but would represent less than 1% of the MSCI EM index.Even so, the $2.8 billion in passive investments expected to be spurred by the upgrade should be more than enough to counter frontier investor outflows of about $155 million, according to Mohamad Al Hajj, equities strategist at EFG-Hermes Holding in Dubai.Buying fueled by the buzz around Kuwaiti stocks has pushed the local index above a level that signals gains may have been overdone in 47 sessions this year. That’s already more “overbought” days than in all of 2018.Read more on why Julius Baer recognizes ‘catch-up’ potential for mid-caps in Kuwait.“There is risk to the Kuwait rally, as it appears to be largely technically driven,” said Asha Mehta, a senior portfolio manager at Acadian Asset Management LLC in Boston. “Corporates in general are showing limited growth and quality attributes, and valuations are stretched. However, the momentum could persist for some time given positive overall GCC sentiment and upward trending commodity prices.”(Updates stock performance in third paragraph.)To contact the reporter on this story: Filipe Pacheco in Dubai at email@example.comTo contact the editors responsible for this story: Celeste Perri at firstname.lastname@example.org, John Viljoen, Jon MenonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
MSCI Inc. , a leading provider of critical decision support tools and services for the global investment community, announced today it will release its results for second quarter 2019 on Thursday, August 1, 2019.
(Bloomberg) -- Investors are starting to tune out the noise of the billions of dollars that flowed into Saudi bonds and stocks in the first half of the year after the kingdom’s upgrade to emerging-market status.While the Saudi government has accelerated the pace of deregulating its capital markets, concerns about the economy’s reliance on oil and escalating tensions in the Persian Gulf are coming back to the fore.The bulk of the estimated $20 billion in inflows from Saudi Arabia’s ascension to two key developing-nation equity indexes would materialize by end-August, according to EFG-Hermes. Meanwhile, the tailwind from its dollar bonds’ inclusion in JPMorgan Chase & Co.’s emerging-market gauges, happening gradually over nine months through September, has largely played out, said Arqaam Capital Ltd.’s Abdul Kadir Hussain.“Once the passive flows subside, courting active investors will be a hard grind,” said M.R. Raghu, the head of research at Kuwait Financial Centre SAK, which manages $3.8 billion. “Foreign investors will perceive Saudi Arabia as a commodity play for some time to come.”Active money managers seek to outperform benchmark indexes by buying and selling securities. By contrast, passive funds track an index.Saudi stocks are also getting more expensive relative to developing-nation equities, with the gap in their estimated price-to-earnings ratios near the widest since 2015. The high valuations are the reason Mark Mobius, a pioneer in emerging-market investing, isn’t joining the party.What’s more, some investors aren’t ready to forgive or forget the murder of columnist Jamal Khashoggi in the Saudi consulate in Istanbul in October.“The Khashoggi incident and the general structure of the rule of law in Saudi Arabia will continue to deter some investors,” said Mobius, who spent three decades at Franklin Templeton Investments before setting up his own firm last year.No LimitThe prospects may not improve much despite regulatory changes in June that are paving the way for foreigners to take controlling stakes in sectors from banking to petrochemicals after Saudi Arabia removed a cap on ownership of publicly traded companies for international strategic investor. Although foreign direct investment more than doubled last year to $3.2 billion, it remains well below the average level of the past decade.“Higher valuations are to some extent justified by the earnings outlook and technicals,” said Michael Bolliger, the Zurich-based head of emerging-market asset allocation at UBS Wealth Management’s chief investment office. “But for this to be sustained, it is crucial that the government keeps up the reform pace and successfully cooperates with the private sector.”Still, Saudi Arabia’s stock market remains under-owned by active emerging-market investors, compared with its Gulf neighbors Qatar and the United Arab Emirates, said Mohamad Al Hajj, a strategist at EFG-Hermes in Dubai.“A pick-up in active inflows, which will likely be selective given valuation levels, would lead to continued net foreign inflows into Saudi going forward,” he said.Saudi Arabia’s bonds have a market value of about $42 billion in JPMorgan’s emerging-market indexes, according to calculations by Arqaam Capital. The debt might be vulnerable to increased swings in U.S. Treasury yields and concerns over global trade tensions and slowing global economic growth in the coming months, said Hussain, the Dubai-based head of fixed-income asset management at Arqaam Capital.The securities have returned more than 11% this year, outperforming the 9.6% gain in emerging markets, according to Bloomberg Barclays indexes.“Risks for the second half are fairly elevated overall,” he said. “We have already had a strong rally in the first six months.”(Updates with comment by EFG-Hermes strategist in 11th, 12th paragraphs.)\--With assistance from Filipe Pacheco.To contact the reporter on this story: Netty Ismail in Dubai at email@example.comTo contact the editors responsible for this story: Dana El Baltaji at firstname.lastname@example.org, Paul AbelskyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Five years in the making. That is essentially the time it has taken for the S&P 500 to hit a milestone mark at 3,000 for the first time in its history. The stock gauge first closed at 2,000 on Aug. 26, 2014, according to Dow Jones Market Data.
(Bloomberg) -- Investors betting on Saudi Arabian shares are showing a clear preference for funds listed in Europe over the U.S. The contrasting picture may come down to which market offers lower fees and more attractive treatment on taxes and dividends.An exchange-traded fund focused on Saudi equities offered by BlackRock Inc. in New York since 2015, the year when the oil-rich kingdom started opening up to foreigners, drew net inflows of about $626 million this year, quadrupling in size from the end of 2018.Still, that’s dwarfed by the $1.5 billion that has poured into BlackRock’s London-listed ETF, which has very similar objectives but is only three months old. A London-listed fund run by Invesco Ltd. that was started last year has attracted $1.1 billion in 2019. Both European options are now bigger than their American predecessor.Saudi stocks have outperformed as index compilers including MSCI Inc. promote the biggest market in the Middle East and Africa to their major emerging-market benchmarks, spurring billions in purchases by passive investors. The New York and London ETFs are studded with large caps that will benefit from the upgrades and have become a favored option for individual investors placing a wager on the Saudi market.BlackRock started its London fund after “significant client demand for an exposure to take advantage of Saudi Arabia’s reclassification,” a spokeswoman for the world’s largest asset manager said in an emailed response to questions.As Saudi Arabia’s elevation by index compilers moves forward, investors could be favoring the European funds due to lower fees and the greater flexibility they offer in terms of dividend treatment, according to Louis Odette, an ETF analyst and strategist at Citigroup Inc. in London. Differences in withholding tax treatment may also play a role, he said.Some investors may also prefer funds run under European Union rules, according to Odette. “Operational preferences and familiarity with the UCITS framework can be relevant.”That acronym refers to Undertakings for Collective Investment in Transferable Securities, the 34-year-old framework of regulations for funds that are officially based and sold in the EU, but can be managed from New York, Hong Kong or elsewhere. The EU has set rules on funds’ liquidity requirements, risk limits, transparency and leverage, and UCITS products can use derivatives to create some leverage and short exposure, but not as much as traditional hedge funds.In the U.S., the Securities and Exchange Commission authorizes and regulates publicly traded funds under the Investment Company Act of 1940.Read a QuickTake about the regulation of funds in the U.S. and in Europe.Whatever the rules, ETF buyers in both markets have been rewarded for their investment. The main Saudi equities index, which advanced 0.6% on Wednesday, has climbed about 23% in the past two years, outperforming the MSCI emerging-market index six-fold.The gains in Riyadh stocks are partly thanks to foreigners, who have been net buyers of Saudi Arabian shares every week this year, a reversal from the sell-off in October triggered by U.S.-based columnist Jamal Khashoggi’s killing. Inflows have remained steady even as geopolitical tensions in the Gulf ticked higher after attacks on oil tankers since May.The Khashoggi incident and its market aftermath are a reminder to investors that buying Saudi assets isn’t a one-way bet.Saudi-focused exchange-traded funds offer the advantage of easy access to the upgrade story, and have “done a good job in attracting assets this year,” said Mohit Bajaj, director of ETFs at WallachBeth Capital in Jersey City. Still, “investors do tend to stray away from Middle East funds dependent on the political landscape.”(Updates index performance below second chart.)\--With assistance from Ksenia Galouchko.To contact the reporter on this story: Filipe Pacheco in Dubai at email@example.comTo contact the editors responsible for this story: Celeste Perri at firstname.lastname@example.org, John Viljoen, Monica Houston-WaeschFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
In March 2017, Morningstar published a study that found that value and low-volatility investment strategies exhibited consistent industry tilts that did not significantly contribute to their success. However, these tilts seemed to help the momentum factor, where they were more dynamic. To investigate this further, I compared the performance of MSCI's sector-neutral and unadjusted quality and value indexes across several markets. The U.S.-focused sector-neutral quality and value indexes are available through iShares Edge MSCI USA Quality Factor ETF QUAL and iShares Edge MSCI USA Value Factor ETF VLUE , respectively.
Henry Fernandez became the CEO of MSCI Inc. (NYSE:MSCI) in 1998. This analysis aims first to contrast CEO compensation...
MSCI (MSCI) has an impressive earnings surprise history and currently possesses the right combination of the two key ingredients for a likely beat in its next quarterly report.
MSCI Inc. (MSCI), a leading provider of critical decision support tools and services for the global investment community, announced today that Frederick W. Bogdan will retire from his position as MSCI’s General Counsel and Assistant Corporate Secretary on January 2, 2020. Robert J. Gutowski, who currently serves as Deputy General Counsel, Head of Compliance and Head of Internal Audit, will succeed Mr. Bogdan in leading the global legal and compliance functions. Mr. Bogdan will remain with the company for a transition period ending on March 2, 2020.
* Saudi rises for a third day * All Saudi banks gain * Aljazira Takaful, Solidarity climb on merger talks * Industries Qatar gains after stock split By Shakeel Ahmad June 27 (Reuters) - All major Gulf markets gained on Thursday, reflecting a global equity rally, amid hopes for a U.S.-China trade truce, with Saudi shares getting a further boost from after limits were lowered on foreign share ownership. Saudi's stock index was up 1.3%, with Arab National Bank rising 7% and Al Rajhi Bank up 1.9%. Saudi stocks were incorporated into the FTSE emerging-market index in March and the MSCI emerging market benchmark in May. Insurers Aljazira Takaful Taawuni and Solidarity Saudi Takaful rose 1.8% and 2.8% respectively after they signed a memorandum of understanding to evaluate their merger in a share-swap deal.
Henry Fernandez, one of our 2019 World’s Best CEOs, steered the IPO of what was once known as Morgan Stanley Capital International—now MSCI—and captured a major share of the index industry.
(Bloomberg) -- Equity traders are usually disappointed when MSCI Inc. downgrades a country’s index status. Not so with Pakistan.Investors had expected the index provider to start talks on demoting the country after it failed to meet the minimum market-size threshold to maintain its emerging-market status. But the New York-based company left out any mention of Pakistan in its annual-review statement earlier this week, and the nation’s equity benchmark has now declined for four straight days, on course for the biggest monthly loss this year.While the omission is consistent with MSCI’s policy to give underperforming markets time to rebound above technical thresholds, traders worry that Pakistan’s presence in the emerging-market group is starving it of foreign-fund flows given its tiny weight. A shift to the frontier gauge may give it a sizable presence in that segment and help it lure fund allocations.“One ray of immediate hope was Pakistan gets a downgrade, leading to a higher weight in frontier markets,” said Gohar Rasool, the head of international sales at Intermarket Securities Ltd. in Karachi. “Local investors see a downgrade as a possible trigger for foreign inflows and would play along and join the bandwagon.”Of the three Pakistan-listed stocks in the MSCI Emerging Markets Index, two have fallen below the minimum market-size requirement, dragging the nation’s weight in the gauge to 3 basis points. If global money managers divided their attention and time by the weight each country got in the index, they would have to spend only 47 minutes a year on Pakistan, Renaissance Capital said earlier this year.Traders’ theory that an MSCI downgrade would enable Pakistan’s stock market to rally has an historical basis. The country lost its emerging-market status on Dec. 31, 2008, after it imposed restrictions on selling stocks following a four-month, 42% plunge in the benchmark measure during the financial crisis.But a rally started the very next month, making Pakistan the world’s best-performing stock market in dollar terms. The 728% cumulative gains came to an end only in May 2017, a week before MSCI returned it to emerging status. Since then, the country’s stocks have been battered mercilessly, erasing more than half their combined market value to $44 billion.Fixing The EconomyNow that MSCI has belied investors’ expectations, they must look to other clues to gauge the equity outlook.Prime Minister Imran Khan’s government has resolved to narrow the current-account deficit after an economic crisis forced the nation to accept a $6 billion bailout by the International Monetary Fund.“What matters for Pakistan is more the cycle and economic reforms and what happens with the IMF,” Mohamad Al Hajj, an equities strategist at EFG-Hermes in Dubai, said by phone. “That’s what is going to drive market returns.”An economic turnaround by Pakistan may take time, but there’s an immediate incentive for equity buyers. The government has approved a fund to buy stocks through a state-owned asset management company. A similar vehicle had been behind the resurgence of equities after the 2008 financial crisis.Traders’ disappointment over the lack of an MSCI downgrade may seem odd, but it has a lot to do with Pakistan’s economic woes and the shallowness of its capital markets. The nation has to prove itself worthy of its rank or relegate itself to a group where it can be a heavyweight.“While other markets (such as Bangladesh, Vietnam) are working toward achieving emerging-market status, Pakistan’s government seems to be taking it for granted,” said Shamoon Tariq, vice chief investment officer at Stockholm-based Tundra Fonder AB in Karachi. “We would really like some concrete steps from the government for market development.”(Adds new 6th, 7th paragraphs with 2008 developments.)To contact the reporters on this story: Srinivasan Sivabalan in London at email@example.com;Faseeh Mangi in Karachi at firstname.lastname@example.orgTo contact the editors responsible for this story: Dana El Baltaji at email@example.com, Anto Antony, Ravil ShirodkarFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- There’s a slew of reasons not to buy shares in Asia right now: trade war uncertainty, global growth worries and slumping profit estimates.But stockbrokers aren’t exactly lacking for business.The average daily trading volume on the MSCI Asia Pacific Index has jumped 58% so far this year to about 21 billion shares -- on track for a record high -- despite the concerns. Market watchers have pointed to one key factor -- dovish central banks.“Traders increase bravado to play the mean reversion trade even when things look dire,” said Stephen Innes, managing partner at Vanguard Markets Pte. “It tells me that the investors have the view that central banks will ride to the rescue and frankly, they have called it right.”Federal Reserve Chairman Jerome Powell moved closer to a rate cut last week, removing a previous pledge to be “patient” in the central bank’s statement. And across the Pacific, Australian policy makers said another cut is “more likely than not,” while Indonesia left rates unchanged but left the door open to ease at some point.Read more: Easy Does It Across Global Central Banks in 2019’s Busiest Week“The core of this is liquidity,” said Kyle Rodda, analyst at IG Markets Ltd. The consequence of policy makers' attempts to stave off a slowdown is “greater financial capital washing around markets, which has flowed into riskier asset classes like equities,” he said in an email.A SharesOthers have suggested the addition of more than 200 Chinese large-cap domestic stocks to MSCI Inc.’s indexes earlier this year as another reason for the increased trading volume. The inclusion of these so-called A shares -- which were historically available only to Chinese investors -- is a stamp of financial credibility that will open China to more global investment. MSCI had long rejected the inclusion of A shares until finally approving them last year.The average daily trading volume in the Shanghai Composite Index has risen almost 90% this year, according to data compiled by Bloomberg.While trading of the top five constituents of the MSCI Asia Pacific Index -- Tencent Holdings, Alibaba Group, TSMC, Samsung Electronics and Toyota Motor -- has remained relatively stable for the last five years, the additional volume may have come from the “bottom tiers, boosted by index shuffling such as MSCI’s,” said Margaret Yang, strategist at CMC Markets Singapore.“Passive funds like ETFs and mutual funds tracking the index will have to reshuffle their portfolio accordingly,” leading to a boost in trading, she said.Volatile YearIncreased volatility, such as that sparked by President Donald Trump’s unpredictable Twitter posts on tariffs, has also played a role.“Fund managers might need to reposition their portfolios to reflect many changes in the global macro environment – interest rate outlook, U.S.-China trade and technology spat, a potential shift of global manufacturing hub out of China,” said Yang.Summer LullStill, this week paints a different picture. Investors have stayed on the sidelines with lower than average volume for most major indexes in the build up to the key G-20 meeting in Japan where Trump and China’s Xi Jinping are set to meet.“Markets are quieter leading into this week’s G-20 meeting – as is always the case coming into any major risk event,” IG’s Rodda said. “But, we are coming off the back of a month where risk-taking has been stoked by increasingly dovish central bankers across the globe. Even more than trade, monetary policy will drive market behavior above and beyond anything else.”To contact the reporter on this story: Divya Balji in Singapore at firstname.lastname@example.orgTo contact the editors responsible for this story: Chris Nagi at email@example.com, Cormac Mullen, Joanna OssingerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Iceland may soon reclaim a place on the investment stage through inclusion in global equity indexes, but with pricey stocks, a fading economy and reforms done and dusted, fund managers are not rushing back there. Iceland is already on course to join index provider FTSE Russell's Frontier Market benchmark in September and rival MSCI said late on Tuesday that it might add its Icelandic stock index to its Frontier Market (FM) equity benchmarks. Investors' reaction to the index announcement was muted however, with Reykjavik's main equity index slipping 0.6% on Wednesday -- more than the 0.2% decline in MSCI's FM 100 index of the largest and most liquid frontier market stocks.
(Bloomberg) -- MSCI Inc. will add Kuwait to its main index tracking stocks in emerging markets next year, once some trading mechanisms are improved, in an upgrade that has been priced in by investors anticipating billions of dollars of inflows.The change is due to happen in June 2020, the New York-based index compiler said in a statement on Tuesday. The Gulf country, whose $98 billion stock market is similar in size to those of New Zealand and Ireland, is currently the biggest member of the MSCI’s main frontier gauge.The promotion had been targeted by the local stock exchange and markets regulator as they modernized trading infrastructure to attract local and foreign investors. Kuwait will now have to compete for the attention of money managers that invest in much bigger markets such as China, India, Brazil, Russia and neighboring Saudi Arabia, which joined the MSCI’s EM index earlier this year.The decision, which follows a similar move on Kuwait by other compilers, “reflects the significant steps it has taken to modify its capital-markets infrastructure,” said Bassel Khatoun, managing director for Frontier and Middle East, North Africa at Franklin Templeton Emerging Markets Equity in Dubai. “With substantial reserves, low levels of debt and a stable banking sector, Kuwait’s fundamentals are attractive in an EM context.”Read more here from an interview with the head of Kuwait’s stock exchange.In order for MSCI to proceed with the upgrade, the index compiler said Kuwait will have to make available so-called omnibus account structures and same national investor number (NIN) cross trades for international institutional investors before the end of November. The country’s capital markets regulator said earlier this month that both mechanisms will be in place no later than November. MSCI will communicate its final decision by the end of the year. An omnibus account allows several different foreign funds to execute trades through a single account.Frontier ReshuffleWith Kuwait’s promotion, Vietnam is now the top contender for the biggest member of the frontier index, which includes countries where stock exchanges and currency markets are too small or underdeveloped to be classified as emerging markets. The Asian market is currently on FTSE Russell’s list for a potential upgrade, but foreign ownership limits and other issues would prevent an imminent elevation by MSCI, according to Mohamad Al Hajj, an equities strategist at EFG-Hermes in Dubai.What Are Frontier Markets and Why Invest in Them?: QuickTake‘More Flows’Kuwait’s main index has advanced more than 20% this year, outperforming gauges tracking emerging and frontier markets as investors anticipated the MSCI decision. The gauge fell 0.6% on Wednesday, reversing an increase of as much as 0.4% earlier.Officials at the capital markets regulator said in an interview they will speed up changes initially proposed for next year in order to meet MSCI’s deadline. They also said that they will soon present amendments for the regulation of market makers, and that a central clearing platform will be tested by the end of this year.National Bank of Kuwait SAK, Kuwait Finance House KSCP and Ahli United Bank BSC, which is merging with KFH, are together expected to draw about $1.8 billion from passive investors following the upgrade, according to estimates by EFG-Hermes’ Al Hajj.While there is enthusiasm and positive sentiment among Gulf investors and analysts, Kuwait’s market is valued at expensive levels, considering the country’s growth prospects, and is “more complex to trade than other emerging markets,” said Asha Mehta, a senior portfolio manager at Acadian Asset Management LLC in Boston. “The overall market liquidity is low compared to emerging markets, and it is concentrated in the larger cap securities.”MSCI also said Tuesday that it may start a consultation process to reclassify Peru and Iceland as frontier markets.(Updates stock performance in 7th paragraph and interview with regulator above Bigger Gains chart.)\--With assistance from Fiona MacDonald.To contact the reporter on this story: Filipe Pacheco in Dubai at firstname.lastname@example.orgTo contact the editors responsible for this story: Celeste Perri at email@example.com, John Viljoen, Blaise RobinsonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
MSCI Inc. (MSCI), a leading provider of critical decision support tools and services for the global investment community, announces today that it will reclassify the MSCI Kuwait Index to Emerging Markets status, subject to omnibus account structures and same National Investor Number (NIN) cross trades being made available for international institutional investors before the end of November 2019. MSCI will communicate its final decision by December 31, 2019.
MSCI Inc said on Tuesday it would upgrade Kuwaiti equities to its main emerging markets index in 2020, a move that could trigger billions of dollars of inflows from passive funds. The index compiler will include the MSCI Kuwait index in the emerging market index in the May 2020 semi-annual index review. MSCI, the world's largest index provider, whose emerging-market group of indexes has about $1.8 trillion of assets tied to it, also said it would start a consultation on reclassifying the MSCI Iceland Index to Frontier Markets status.
Overall, the banks, investment funds, real estate and insurance companies which make up the financials sector have had a difficult 2018. The sector has entered bear market territory in the last few weeks of 2018 by falling more than 20% from its 52-week high from January.
(Bloomberg) -- MSCI Inc. will probably upgrade Kuwaiti equities to its main emerging-market index this week, which could trigger $2.8 billion of inflows from passive funds, according to the head of the nation’s stock exchange.“We have ticked all the boxes that are required by MSCI,” Mohammad Al-Osaimi, the acting chief executive officer of Boursa Kuwait, said in an interview on Sunday. “We have also offered international investors additional services and products they were looking for and some changes in bylaws they requested. We have touched base with them on our roadshows. We saw a comfortable response.”The New York-based index compiler, whose emerging-market group of indexes has about $1.8 trillion of assets tied to it, will announce on June 25 whether it’s lifting the country from its current frontier classification. The decision will become public shortly after 10:30 p.m. Central European Summer Time.This is significant for the small Gulf nation and its $98 billion stock market, which is similar in size to those of Ireland and New Zealand. Local authorities have been tying to modernize trading infrastructure and attract foreign investors in the past few years. The exchange was upgraded by FTSE Russell less than one year ago. The main Kuwaiti index rose 0.4% on Monday, extending its gain this year to 21%.Kuwait’s reforms include segregating stocks based on size and liquidity, and separating shares that hardly trade in comparison to the biggest and most liquid names, primarily banks.In neighbor Saudi Arabia, MSCI’s inclusion of shares in the emerging-market gauge is expected to lead to about $11 billion of inflows once fully implemented, according to estimates by the Saudi stock exchange.Aiming to lure active fund managers that would look beyond the benchmarks, Al-Osaimi said the bourse is working with the markets regulator to ensure companies trading in the premier market have investor-relations departments. It may be made obligatory by next year, he said.More from the interview:An initial public offering of the stock exchange could happen this year or the beginning of 2020.Two or three IPOs are expected in the next 12 months.Exchange’s new board is aiming to attract local petrochemical companies to list.Short-selling will be introduced “in the upcoming days,” and will be followed by stock lending and borrowing.Bourse aims to introduce margin trading by the end of the year.(Updates index performance in fourth paragraph to close.)To contact the reporters on this story: Filipe Pacheco in Dubai at firstname.lastname@example.org;Fiona MacDonald in Kuwait at email@example.comTo contact the editors responsible for this story: Celeste Perri at firstname.lastname@example.org, Paul Wallace, Paul JarvisFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.