History Says Investors Get Gored by MSCI Upgrades (Reuters)
MSCI upgrades of the United Arab Emirates (UAE) and Qatar to emerging market status at the end of this week have already sent their stock markets soaring. In fact and since MSCI announced the upgrade last June, Dubai’s main index has surged 112%, making it one of the world’s best-performing markets, while Qatar has risen 44% and Abu Dhabi has gained 43%.
However, a Reuters analysis of the performance history of other emerging or frontier markets upgraded by MSCI shows that many actually ended up performing poorly in the 12 months that followed because their stocks had become so richly valued in anticipation of the upgrades.
Specifically, and on average, MSCI indexes for Portugal, Greece, Israel, Pakistan, Serbia, Lithuania, Sri Lanka, Egypt and Morocco posted a loss of 2.5% in the first month, a gain of 3.4% over six months and a loss of 4.0% over 12 months while a year after upgrade, five out of nine country indexes were underperforming their MSCI benchmarks.
Moreover, Reuters says that data shows foreigners are already cutting their exposure to Dubai while inflows into Abu Dhabi and Qatar are continuing, but they are also more.
To read the whole article, MIDEAST WEEKAHEAD-UAE, Qatar bourse bull runs may end with MSCI upgrade, go to the website of Reuters.
- Fund Managers’ Opinions on the UAE and Qatar’s Emerging Markets Upgrade (The National)
- How the MSCI Emerging Markets Index Changes Will Impact Investors (P&I)
- How MSCI’s Removal of Qatar & UAE Impacts the Frontier Markets Landscape (MM)
- Frontier Markets: Small, Concentrated & Misunderstood (Financial Advisor)
- Frontier Market ETFs Have 72% Exposure to Oil-Dependent Countries (FT Adviser)
- The “Halo Effect” of Saudi Arabia’s Emerging Markets Arrival (Franklin Templeton)
- FLASHBACK: Moody’s Downgrades Qatar Rating to Aa3 But Changes Outlook to Stable from Negative (Moody’s)
- Qatar Long-Term Rating Lowered To ‘AA-‘; On Watch Negative (S&P)
- Changes to the Emerging Markets Club: China (A Shares), Argentina and Saudi Arabia (Franklin Templeton)
- Tiny, Wealthy Qatar Goes Its Own Way, and Pays for It (NYT)