Definition
The MSCI Emerging Markets Index is a market capitalisation-weighted equity index maintained by MSCI Inc. that tracks the performance of large and mid-cap companies across emerging market economies. It is one of the most widely tracked benchmarks for emerging market equity investment, with trillions of dollars in assets benchmarked to or tracking the index.
The index is used by institutional investors, fund managers, and exchange-traded funds as a reference for emerging market equity allocation. Inclusion in the index influences passive investment flows, portfolio allocation decisions, and the visibility of a country’s capital market to the global investment community.
Methodology
MSCI classifies countries into Frontier, Emerging, and Developed market categories based on criteria including economic development, market size and liquidity, market accessibility (including capital controls, foreign ownership limits, and settlement efficiency), and the institutional framework for investor protection.
Countries are reviewed periodically and may be reclassified based on changes in these criteria. Reclassification from Frontier to Emerging — or from Emerging to Developed — status triggers significant shifts in passive investment flows.
Qatar’s Inclusion
Qatar was reclassified from Frontier Market to Emerging Market status by MSCI in 2014. The upgrade reflected improvements in the Qatar Stock Exchange’s market infrastructure, the liberalisation of foreign ownership limits, and enhanced market accessibility for international investors.
The reclassification triggered substantial passive capital inflows into Qatari equities, as index-tracking funds adjusted their portfolios to include Qatari stocks. Major Qatari companies represented in the MSCI Emerging Markets Index include Qatar National Bank, Industries Qatar, and Qatar Islamic Bank.
Significance
MSCI Emerging Market inclusion is a milestone in the development of a country’s capital markets. For Qatar, the upgrade enhanced the international profile of the Qatar Stock Exchange, increased liquidity, deepened the foreign investor base, and supported the National Vision 2030 objective of building a competitive and internationally integrated financial sector.