MIDEAST STOCKS-MSCI index adjustments may boost UAE, Qatar – Reuters

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DUBAI Nov 9 (Reuters) – Several stocks in the United Arab
Emirates and Qatar look likely to gain on Sunday after index
compiler MSCI increased their weightings in its emerging markets
benchmark at the end of last week.

In a semiannual review, MSCI increased the weights for three
stocks in the UAE and four in Qatar, citing relaxed foreign
ownership restrictions.

In May, when MSCI upgraded the UAE and Qatar to emerging
market status, it cut the weightings of a number of companies by
a factor of 0.5 because of limits on foreign ownership and
concerns about overall liquidity.

Now, however, in a review that will take effect at the end
of November, MSCI has removed the adjustment factor for Emaar
Properties, Dubai Islamic Bank and First
Gulf Bank.

In Qatar, MSCI added drilling rig provider Gulf
International Services to the emerging market index
and removed the adjustment factor for Qatar National Bank
, Industries Qatar, Commercial Bank of Qatar
and Doha Bank.

According to estimates by brokerage VTB Capital, the
adjustments will result in total net fund inflows of $1.1
billion into the UAE and $1.9 billion into Qatar. Passive
inflows, which usually happen just before an adjustment takes
effect, would be much smaller: $132 million for the UAE and $235
million for Qatar.

Another brokerage, EFG Hermes, has a much more optimistic
analysis, estimating total passive inflows into both countries
at $1 billion.

“We estimate that the changes highlighted above will
increase Qatar’s weight in the MSCI emerging markets index from
0.63 percent to 0.92 percent, and UAE’s weight from 0.54 percent
to 0.72 percent,” it said in a note on Sunday.

Some of the changes had been expected by the market as QNB
and Industries Qatar rallied in the last few weeks. But other
stocks, such as FGB, have gained little or declined in the same

In Abu Dhabi, Dana Gas may rise after Iraqi
Kurdistan said on Friday that it would make an initial payment
of $75 million to oil producing companies for their exports and
make further payments on a regular basis, sparking a rally in
producers’ share prices in European markets.

Dana’s payment dispute with Iraqi Kurdistan is over gas, but
investors may still view the Kurds’ apparent willingness to
settle with foreign energy firms as a positive signal.

In Saudi Arabia, Mobily may remain under pressure
in the wake of its accounting debacle and results restatement as
unfilled sell orders still outweighed buy orders on Thursday,
though its drop may slow from the 10 percent limit-down falls
seen on each of the past three trading days. Late on Thursday,
the company said it would not distribute a dividend for the
third quarter and would evaluate whether to pay shareholders in
coming quarters.

Meanwhile, the Saudi central bank announced that rules
covering real estate mortgage financing and other finance
company activity were formally taking effect, potentially
clearing the way for the industry to develop.

However, growth in the industry is expected to be cautious
given other legal uncertainties and customer unfamiliarity, so
shares may not get any immediate boost.

(Reporting by Olzhas Auyezov; Editing by Andrew Torchia)

MIDEAST STOCKS-MSCI index adjustments may boost UAE, Qatar – Reuters}