Equity markets taking steps to be promoted to emerging market status at MSCI
Market regulators in the Arabian Gulf must share information and enhance transparency as bourses take steps to be promoted to emerging market status, according to the executive director of the Hawkamah Institute for Corporate Governance.
“We need to have an arrangement in place between regulators so that there’s much more sharing of information,” Nasser Saidi said at the Fifth Annual Regional Corporate Governance Conference in Muscat, Oman today.
Promotions to emerging market status at index provider MSCI Inc would ensure “better interaction between companies, investors markets and regulators; it would mean we’d be recognized internationally.”
Tightened credit, coupled with an exodus of speculators from the Dubai real estate market, resulted in a collapse of the region’s property industry and lower trading volumes.
Police investigations of senior business officials, including executives of Nakheel, Damas International and Tamweel, tainted the emirate’s image as Dubai’s benchmark index tumbled 80 percent to 1,764.54 from its peak in 2005.
Gulf equity markets are taking steps to improve their chances of being promoted to emerging market status at MSCI, with Qatar and the UAE signaling that they will soon implement short selling to meet the index provider’s requirements.
MSCI classifies six of the Gulf’s seven bourses as frontier markets, a designation that typically applies to economies and financial markets that are less developed than emerging markets and that have more restrictions on foreign stock ownership.
Qatar’s exchange expects the foreign ownership limit in companies to increase to 49 percent from 25 percent, Saif Al Mansoori, deputy chief executive officer of the exchange, said last week.
Saudi Arabia’s market regulator is working on foreign ownership of shares and listed companies are being asked to make disclosures available in English so international investors can access information, General Manager Abdullah al Suweilmy said October 25.
Saudi Arabia is the only Gulf bourse not classified at MSCI.
Merging Gulf bourses would also help attract international investors, Saidi said: “We need size, depth and liquidity. All of that calls for mergers and the consolidation of exchanges.”