Morgan Stanley has upgraded Dubai Financial Market to Emerging Markets status

Dubai Financial Market on welcomed the decision to upgrade UAE bourses to emerging markets status, saying the move was "overdue".

The decision by Morgan Stanley Capital International (MSCI) was hailed as a "significant step" by Essa Kazim, managing director and CEO, Dubai Financial Market.

In a statement, he said: "This significant step evidently demonstrates international institutions' recognition of DFM's pivotal role over the last thre years to further enhance the UAE market infrastructure.

"This development is overdue in light of the market infrastructure improvements made and ticking of all upgrade requirements a long time ago."

DFM spared no effort and has taken numerous initiatives to lay out the necessary frameworks for various development steps including the implementation of the "Delivery versus Payment" (DvP) mechanism since 2011 as well as the implementation of a Buyer Cash Compensation feature last May. Additionally, we have been actively engaged in productive discussions with various market participants including custodians and institutional investors via a series of meetings held in the global financial centers. The aim of these meetings was not only to explain measures taken but also to listen to their remarks and feedback on further initiatives to follow," Kazim added.

Furthermore, I would add Investors look to changes in MSCI indexes as they are largely followed as benchmarks for both mutual and exchange-traded funds. MSCI estimates that nearly $7 trillion is benchmarked to various MSCI indices on a worldwide basis. About $1.4 trillion is benchmarked to the MSCI Emerging Markets Index.

Therefore, from my perspective emerging markets tend to have higher growth than developed markets and it is step to keep investors in safe position or in small risk even when markets fall. For these investors, emerging market stocks continue to provide important diversification benefits even during periods of significant market declines. 

Emerging economies are expected to grow an impressive two to three times faster than developed nations, according to April 2012 IMF estimates. As an investor, this is important because corporate revenues have the potential to grow faster when economic growth is higher. However, it's important to keep in mind that bottom-line profits also depend on keeping expenses low.

I hope it will be a good opportunity for UAE stock market to enhance its performance and reach levels that achieve good returns for the UAE market and investor.