MSCI confirms Kuwait EM upgrade effective 30th November & $10 billion+ of new investment could flow into Kuwaiti equities as a result
Hector McNeil, Co-Ceo of HANetf
– MSCI has confirmed that Kuwait will be upgraded from frontier market to emerging market status effective 30th November 2020
– Boursa Kuwait predicts potential passive asset flows of $2.9 billion
– KMEFIC FTSE Kuwait Equity UCITS ETF (KUW8) was the first Kuwait ETF available globally when listed in 2019
– 15 of the 17 stocks in the KMEFIC FTSE Kuwait Equity UCITS ETF (KUW8) to be included in the MSCI upgrade
– KUW8 is an effective way to invest in Kuwaiti equities rather than buy individual companies in Dinars
KMEFIC FTSE Kuwait Equity UCITS ETF (KUW8) estimates that the MSCI’s reclassification of Kuwait indices from frontier market status to emerging market on 30th November could see around $10 billion of asset flows into Kuwaiti stocks.
Boursa Kuwait have recently predicted $2.9 billion from passive investments and industry research has estimated that around $8 billion of this new investment could come from active strategies .
In total, 7 large cap and 14 small cap Kuwaiti stocks will be included in the MSCI’s new Emerging Market Standard Index . 15 of KUW8’s 17 stocks are included in this upgrade and which provides 98.4% correlation to the MSCI Kuwait 20/35 Index and 96.8% to the MSCI All Kuwait Select Size Liquidity Capped index.
Abdullah Al-Busairi, the Director of KMEFIC FTSE Kuwait ETF, commented: “The MSCI inclusion is expected to drive up the Kuwaiti stock market leading up to the event at the end of this month through buy side pressure.
“We could see around $3 Billion of passive flows into companies listed on Borsa Kuwait and this expectation is likely to attract active investors looking to profit from this event.”
“Nearly all the stocks in KUW8 are included in the MSCI’s upgrade, so we expect them to see significant in-flows, which should have a positive impact on KUW8 ETF’s performance.”
Hector McNeil, Co-Ceo of HANetf, commented: “KUW8 was the first ETF globally to offer exposure to Kuwaiti equities. It was designed specifically with this upgrade in mind. International investors often find it difficult to trade emerging markets locally due to complex custody arrangements, currency issues, and different trading times and days. Rather than trade 15 individual companies in Kuwaiti Dinars, investors can invest in one ETF, in USD, GBP or EUR. There is no need for currency conversion and local custody. KUW8 is also available in European trading hours, which overlaps and extends past those in Kuwait. KUW8 is also available to trade on Fridays when the local market is closed. All these benefits are significant to international investors.”