DOHA: The International Index Compiler S&P Dow Jones Indices announced its decision to reclassify Qatar as an Emerging Market, from the existing Frontier. Qatar meets enough quantitative criteria for qualification and the new status will come in to effect in September 2014, the Index Compiler said yesterday.
“The foreign ownership limit, while still viewed as below the standards of most other emerging markets, has become a point of emphasis for change in Qatar as several large companies have increased their limits to encourage further foreign investment. Continued dedication to increase the limits is an expectation from most market participation”, S&P Dow Jones said.
Qatar Exchange’s (QE) promotion is also supported by its decision to introduce DVP (Delivery Versus Payment) settlement system. The settlement system was introduced in 2011 and enhanced twice in 2012 to ensure full protection of investors’ assets in case of rejection by the seller, the Index compiler noted.
The Qatari bourse has launched the securities lending and borrowing facilities. The facilities are currently only available for use by liquidity providers and as a mechanism to prevent settlement failures.
Market participation in Qatar is viewed as robust and ease of entry into the market is in line with the standards set by other emerging markets, the index compiler also noted.
S&P Dow Jones Indices announced the results yesterday after its Country Classification consultation initiated in August 2013. Along with Qatar, the UAE has been promoted to the Emerging Market status from the Developed Market. Greece has been re-classified as “Emerging Market” from the existing “Developed Market”.
Additionally, South Korea and Taiwan will be designated as developed and emerging markets, respectively, across all global benchmarks bringing consistency across S&P and Down Jones branded indices. Egypt and Morocco will remain emerging markets. Bahrain, Kuwait and Oman will remain frontier markets. Saudi Arabia will remain classified as a standalone market. All changes will be effective at the annual reconstitution in September 2014.
The Global Index compiler MSCI has already announced its decision to upgrade Qatar to “emerging market” status after several years of efforts by the QE to win the confidence of global investors. Qatar’s upgrade b y the MSCI is expected to take effect around May 31, 2014.
Inclusion of Qatar in the MSCI Emerging markets index would aid in inflow of institutional money into the country’s capital market, Kuwait Financial Centre (Markaz) noted in its latest report on “GCC Outlook for the second half of 2013”.