MSCI index weighting increases for Emaar, FGB and Dubai Islamic Bank

The UAE’s weighting in the Emerging Markets Index increased to 0.72 per cent from 0.54 per cent.

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Emaar Properties, FGB and Dubai Islamic Bank received a boost after MSCI increased their weighting on the Emerging Markets Index.

The move is expected to increase trading in their shares.

Emaar, developer of the world's tallest skyscraper, had its weight on the index on Friday increased to 0.24 per cent from 0.12 per cent. The change translates to US$267.1 million of net inflows, according to the Egyptian investment bank EFG Hermes. FGB, the Abu Dhabi-based lender, will have its representation increased to 0.10 per cent from 0.05 per cent.

This will bring in $100.3m worth of foreign investment, the EFG analysts Simon Kitchen and Mohamed Al Hajj said in a report distributed to clients yesterday.

MSCI also increased the weighting of Dubai Islamic Bank to 0.05 per cent from 0.03 per cent, translating to $54.3m in expected net inflow.

The change in the three stocks increases emerging markets inflow estimates to $415m, Mr Kitchen and Mr Al Hajj said. It means that the UAE’s weighting in the Emerging Markets Index increased to 0.72 per cent from 0.54 per cent.

“It’s good news for these stocks’ shareholders as the weighting increase should translate to more liquidity,” said Nabil Farhat, a partner at Al Fajer Securities.

“Portfolio managers that track these indices will have to re­adjust by buying more shares in these companies.”

MSCI also added Deyaar Development, Union Properties and Drake & Scull International to its separate Emerging Markets Small Cap Index.

They have 0.10 per cent, 0.10 per cent and 0.04 per cent weightings respectively.

UAE equities have enjoyed a bull run since last year following a recovery in the banking and property sectors.

The Abu Dhabi Securities Exchange General Index is up 13.4 per cent so far this year, while the Dubai Financial Market General Index has gained 32.1 per cent over the same period.

The UAE and its stocks were incorporated into MSCI’s Emerging Markets Index in June this year after they were upgraded from their previous frontier markets designation a year earlier.

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