UAE and Qatar gain upgrade to EM status Qatar and the United Arab Emirates will be upgraded to emerging market status by a leading index provider, opening the countries" exchanges to increased global investment flows. Shares in both Gulf countries, currently classified as frontier markets, rallied on news of the promotion by MSCI. Both have made unsuccessful bids for an upgrade in the past, but success for Qatar was less expected. Qatar's stock market rose to its highest level in five years, while Abu Dhabi shares climbed to levels not seen since 2009, according to Bloomberg. Inclusion in MSCI's Emerging Market Index could attract $800m of new inflows into the two countries" markets, HSBC estimates, as more risk-averse investors start to consider them. Both the UAE and Qatar are competing to become financial hubs for the oil-rich Gulf region. "Today's decision firmly establishes the region on the emerging markets growth map in the minds of global institutional investors," said Georges Elhedery, HSBC's head of global markets for the Middle East and North Africa. The upgrades - which will take effect in May 2014 - came as a result of operational improvements to securities markets by the two Gulf states. The MSCI also highlighted Qatar's progress on foreign ownership limits, while urging the authorities to increase them further. Akber Khan, director of asset management at Al Rayan Investment in Doha, said: "From a global investor perspective, the timing is very good as both countries are set to embark on tens of billions of dollars of spending over the next three to five years, offering tremendous opportunities." Not all investors expect the announcement to affect their investment strategy. Sam Vecht, head of BlackRock's emerging markets specialist team, said the announcement was unlikely to have a significant long-term impact on the management of its client portfolios. "We have been broadly positive on both of these countries for the last two years," said Mr Vecht, highlighting post-crisis restructuring, strong earnings growth and high dividend yields. HSBC estimates the two Gulf countries will have a combined weighting of 0.71 per cent in the MSCI Emerging Market Index, above Egypt, the Czech Republic and Hungary. MSCI also announced that Greece will be downgraded from developed market to emerging market status in November, on account of its failure to meet requirements on short selling, securities borrowing and lending facilities and transferability. Morocco will also be downgraded to a frontier market, MSCI said. The index provider also highlighted concerns over Egypt's emerging market status, adding: "The recent shortage of foreign currency on the domestic foreign exchange market is of great concern to international investors."