During the annual market classification review, MSCI analyses and seeks feedback on those markets it has placed under review for potential reclassification – this year it includes Greece and Morocco, which both face downgrades, and Korea and Taiwan which could be upgraded, in addition to Qatar and the UAE. Decisions are due on all the countries on 11 June.
MSCI has around $7trn in global assets benchmarked against its indices and being reclassified can have a significant impact on the amount of foreign investment received by a country.
Both Qatar and the UAE have previously anticipated being upgraded to emerging market status but have so far been disappointed. In 2011, stringent foreign ownership limits was cited as a particular concern for Qatar, although these are still in place today.
The two countries currently make up almost 30% of the frontier market index, with the UAE contributing 12% and Qatar 15%.
Morocco meanwhile will be concerned about a possible downgrade to frontier status, as it makes it a more risky and therefore potentially less attractive investment destination for investors.
Korea and Taiwan however may make the move up to developed market status.
International Adviser asked Peter Lowman, chief investment officer at UK based wealth management boutique Investment Quorum if there was anything advisers or investors need to do to their portfolios to accomodate this type of change.
Click below to listen to Lowmans’s response
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