Kuwait stocks beat peers in the Gulf this year as investors bet that MSCI will promote the country into its main index tracking stocks in emerging markets in June 2020.
The Boursa Kuwait Premier Market Index, which includes the biggest and most liquid stocks in the country, has advanced about 30 percent this year.
MSCI has said that Kuwait’s change from its current “frontier” status would happen after certain trading mechanisms were improved. The compiler will give a final decision on Wednesday after 11pm Central European Time.
The stock exchange has made all the necessary changes to guarantee the lift, CEO Mohammad Al Osaimi told Bloomberg Television last month.
The index performance this year suggests that investors are also confident.
Mohamad Al Hajj, an equities strategist at EFG-Hermes Holding in Dubai, expects the country to become 0.8 percent of the MSCI Emerging Markets Index, leading to inflows by passive investors of about $3.8 billion.
As investors prepare for the upgrade, exchange-traded funds have become a way for foreigners to place bets. BlackRock filed this month for the registration of what would be the first Kuwait-focused ETF to trade in the New York. In Europe, the HANetf KMEFIC FTSE Kuwait Equity UCITS ETF and the Invesco MSCI Kuwait UCITS ETF, both launched this year, and have total assets of $43 million and $53 million, respectively.
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