Kuwaiti equities to be in main MSCI emerging markets index from 2020
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[June 26, 2019] DUBAI
(Reuters) - 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. It said it would announce the results of this by Nov.
29.
Kuwait's Market Development Project was implementing several 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.
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MSCI expects Kuwait to introduce more reforms before the end of 2019,
such as introducing omnibus accounts that would allow foreign investors
to trade while remaining anonymous, offering the same privileges that
local investors now have.
The Kuwaiti capital market regulator has already announced plans for
such facilities to be available to the wider market by November, Arqaam
Capital said in a note.
"These enhancements have significantly increased the accessibility level
of the Kuwaiti equity market for international institutional investors,"
Lieblich said.
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Screens showing U.S. President-elect Donald Trump are seen as
traders monitor stock information at the Borsa Kuwait Stock
Exchange, in Kuwait City, Kuwait November 9, 2016. REUTERS/Stephanie
McGehee/File Photo
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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 20% so far this year. It was down 0.5%
in early trade on Wednesday.
"MSCI EM inclusion could represent the biggest ever liquidity event for Kuwait's
stock market," said Salah Shamma, head of investment MENA at Franklin Templeton
Emerging Markets Equity, adding that a 0.5% representation in the MSCI EM index
could attract investor flows of about $10 billion.
MSCI said Kuwait's plans also included introducing central clearing counterparty
and making available stock swaps, stock lending and short-selling facilities.
(Reporting by Jennifer Ablan in New York and Saeed Azhar and Davide Barbuscia in
Dubai; Editing by Leslie Adler and Edmund Blair)
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