MSCI Adds Kuwait Stocks to Emerging Market Index

MSCI Adds Kuwait Stocks to Emerging Market Index
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MSCI Adds Kuwait Stocks to Emerging Market Index

MSCI Adds Kuwait Stocks to Emerging Market Index

MSCI, the world’s largest index provider, on Wednesday reclassified Kuwait stock indexes to emerging markets status from frontier, a move that could funnel at least $2 billion in passive investment flows.

Seven Kuwaiti securities will be added to the benchmark MSCI Emerging Markets Index .MSCIEF at an aggregate weight of 0.58%, MSCI said.

Kuwait will effectively be reclassified to the Emerging Market Index after the Nov. 30 close, while the deletion of Kuwaiti securities from the Frontier Markets 100 index .

The implementation was originally expected in May but was delayed because of the COVID-19 pandemic. MSCI announced Kuwait’s reclassification late last year.

Kuwait is currently by far the largest constituent of the MSCI Frontier Markets Index, making up 36.15% of it, Reuters reported.

“Taking Kuwait’s roughly $100 million of daily trading out of the Frontier does diminish liquidity dramatically,” said Hasnain Malik, head of equity research at Tellimer, adding that was the reason MSCI was phasing Kuwait’s exit from the FM 100 Index.

Salah Shamma, head of investment, MENA, at Franklin Templeton Emerging Markets Equity, expects the reclassification to bring over $2 billion in passive flows to the Kuwaiti index.

“Kuwait’s inclusion should increase the MENA region’s representation in the MSCI Emerging Market Index to 6%, making it a sizable region within the wider EM index and rendering it more difficult for investment managers to ignore,” Shamma said.

Kamco Invest said in a research note that it expected passive flows to be $2.9 billion, down from a previous estimate of $3.1 billion, reflecting “the broad decline in the Kuwaiti indices”.

Kuwait’s main index has dropped nearly 13% in the year to date, making it the second-worst performing main index in the Gulf behind Dubai’s.



Oil Rises as Investors Weigh Market Outlook, Tariffs, Sanctions

A view shows oil pump jacks outside Almetyevsk in the Republic of Tatarstan, Russia June 4, 2023. REUTERS/Alexander Manzyuk
A view shows oil pump jacks outside Almetyevsk in the Republic of Tatarstan, Russia June 4, 2023. REUTERS/Alexander Manzyuk
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Oil Rises as Investors Weigh Market Outlook, Tariffs, Sanctions

A view shows oil pump jacks outside Almetyevsk in the Republic of Tatarstan, Russia June 4, 2023. REUTERS/Alexander Manzyuk
A view shows oil pump jacks outside Almetyevsk in the Republic of Tatarstan, Russia June 4, 2023. REUTERS/Alexander Manzyuk

Oil prices rose by around 1% on Friday as investors weighed a tight prompt market against a potential large surplus this year forecast by the IEA, while US tariffs and possible further sanctions on Russia were also in focus.

Brent crude futures were up 76 cents, or 1.11%, at $69.40 a barrel as of 1153 GMT US West Texas Intermediate crude ticked up 82 cents, or 1.23%, to $67.39 a barrel.

At those levels, Brent was headed for a 1.6% gain on the week, while WTI was up around 0.6% from last week's close.

The IEA said on Friday the global oil market may be tighter than it appears, with demand supported by peak summer refinery runs to meet travel and power-generation, Reuters reported.

Front-month September Brent contracts were trading at a $1.11 premium to October futures at 1153 GMT.

"Civilians, be they in the air or on the road, are showing a healthy willingness to travel," PVM analyst John Evans said in a note on Friday.

Prompt tightness notwithstanding, the IEA boosted its forecast for supply growth this year, while trimming its outlook for growth in demand, implying a market in surplus.

"OPEC+ will quickly and significantly turn up the oil tap. There is a threat of significant oversupply. In the short term, however, oil prices remain supported," Commerzbank analysts said in a note.

Further adding support to the short-term outlook, Russian deputy prime minister Alexander Novak said on Friday that Russia will compensate for overproduction against its OPEC+ quota this year in August-September.

"Prices have recouped some of this decline after President Trump said he plans to make a 'major' statement on Russia on Monday. This could leave the market nervous over the potential for further sanctions on Russia," ING analysts wrote in a client note.

Trump has expressed frustration with Russian President Vladimir Putin due to the lack of progress on peace with Ukraine and Russia's intensifying bombardment of Ukrainian cities.

The European Commission is set to propose a floating Russian oil price cap this week as part of a new draft sanctions package, but Russia said it has "good experience" of tackling and minimising such challenges.