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MSCI upgrades Kuwait equities to its main emerging markets index

Kuwaiti market has outperformed in the Middle East this year in anticipation of the MSCI move.

Reuters|
Jun 26, 2019, 11.13 AM IST
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MSCI EM rejig: India's weight loss could result in $700-m outflows
MSCI said Kuwait plans to introduce more reforms such as a central clearing counterparty and availability of stock swaps, stock lending and short-selling facilities.
MSCI Inc upgraded Kuwaiti equities to its main emerging markets index on Tuesday, which could trigger billions of dollars of inflows from passive funds.

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 will consult on the potential reclassification of the MSCI Iceland Index to Frontier Markets status.

Kuwait's Market Development Project has set the path for the "seamless" implementation of numerous regulatory and operational enhancements in the Kuwaiti equity market, said Sebastien Lieblich, global head of equity solutions and chairman of the MSCI Equity Index Committee.

"These enhancements have significantly increased the accessibility level of the Kuwaiti equity market for international institutional investors and resulted in broad positive feedback from these investors on our reclassification proposal," Lieblich said.

The Kuwaiti market has outperformed markets in the Middle East this year in anticipation of the MSCI move.

The benchmark premier index is up about 21 per cent so far this year.

"MSCI EM inclusion could represent the biggest ever liquidity events for Kuwait's stock market," said Salah Shamma, head of investment MENA at Franklin Templeton Emerging Markets Equity.

"If we assume a 0.5 per cent representation in MSCI EM, that could result in total investor flows of about $10 billion, which would be supportive for future market performance."

MSCI said Kuwait plans to introduce more reforms such as a central clearing counterparty and availability of stock swaps, stock lending and short-selling facilities.

MSCI also announced the launch of a consultation to potentially reclassify the MSCI Iceland Index from Standalone Markets to Frontier Markets status. MSCI said it will announce the results of this consultation on or before Nov 29.
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