The success of Qatar, Saudi Arabia, and the UAE at MSCI Inc is prompting Kuwait to push for an upgrade at the index provider as early as next year.
The market regulator is in touch with local and foreign investors to improve the exchange’s infrastructure, Mishaal al-Usaimi, vice-chairman of Kuwait’s Capital Markets Authority, said in an interview. “We will strive to work as we did before and collaborate with all parties to complete the implementation of the remaining phases of the market development programme.”
MSCI, which has more than $1.9tn in assets benchmarked to its emerging markets indexes, said this week it’ll include Kuwait in its annual market classification review for a potential reclassification from frontier to emerging market next year. If the upgrade happens, the implementation would take place in 2020.
The $80bn stock exchange introduced measures last year to update the infrastructure with the goal of luring international interest and breathing life into a large portion of shares that barely move. In April, it implemented changes that included segregating stocks into three sections based on criteria such as market value and trading volume.
“Any attention to our Gulf Co-operation Council region is a good and positive thing,” al-Usaimi said, referring to Saudi Arabia’s upgrade at MSCI this week. “As long as the focus on institutional investors is to our region – be it Saudi Arabia or Kuwait – that sheds a big light on all participants in the capital market.”
Last year, index compiler FTSE Russell classified Kuwait as an emerging market, with implementation starting this September. The inclusion is expected to draw $900mn to Kuwaiti stocks, according to estimates by EFG-Hermes Holding.
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