As UAE and Qatari stocks inch closer to their inclusion on MSCI's emerging markets index, analysts are already expecting fresh inflows to top US$1 billion for those countries' stock markets.
A report by EFG-Hermes, the region's biggest publicly listed investment bank, forecast $516 million in new money to the UAE, with the Dubai developer Emaar Properties enjoying the bulk of that liquidity. "Our estimates indicate that Emaar and QNB [Qatar National Bank] will see the largest dollar flow from passive funds, of $162m and $102m, respectively," said the research analysts Simon Kitchen and Mohamed Al Hajj in a note to clients yesterday.
The analysts estimated $492m worth of inflows for Qatar.
The bank maintains an overweight rating on the UAE and its three stock markets – the Abu Dhabi Securities Exchange, Dubai Financial Market and Nasdaq Dubai. Less liquid stocks, such as National Bank of Abu Dhabi and the ports operator DP World, are expected to benefit the most from the inclusion.
However, price appreciation of stocks is not guaranteed, the analysts said, based on the Greek experience, when stocks from that nation entered the emerging markets index in November.
“We find that most MSCI Greece Index members fell on T-1 [the day before local stocks were included into index], with higher-than-average turnover indicating aggressive selling into passive flows,” the note said.
The bank said it did not expect much change in the list of stocks expected to be included in the index in June. A final list for the two countries is expected to be announced on May 14.
The ADX General Index rose 63 per cent last year, while the DFM General Index achieved a whopping 107.6 per cent return for its investors.
Shares were boosted after MSCI, which tracks $7.3 trillion in equities around the world, in June classified the UAE as an emerging market, upgrading its previous designation as a frontier market.
halsayegh@thenational.ae
