EUR 55.90 For Business Accounts Only

MSCI May 2019 SAIR playbook: Qatar to witness inclusions; Watch out for significant exclusions in UAE

Look for three potential additions in Qatar. MSCI’s individual ownership limit (IOL) consultation came in favour of QFLS QD and MPHC QD. We view QFLS QD as a strong candidate for inclusion in the May 2019 rebalance, with expected inflows of USD254mn (75 DTT). Meanwhile, MPHC QD passes the size criteria, but fails two quarters of liquidity, making it more eligible for the November 2019 rebalance. If included, the stock would witness flows of USD151.2mn (75 DTT). QIIK QD is a strong candidate for inclusion in the Standard index, provided its FOL increases. The stock’s FFMC would almost double to USD1.5bn, making it 3% short of the cut-off. In case of inclusion, the stock would capture 2.6% of the Standard index and witness inflows of USD137mn (124 DTT).

UAE to witness exclusions in May and November 2019. We believe DAMAC UH is an imminent exit in the May 2019 rebalance, as its FFMC falls 66% below the cut-off, which is under the 33% buffer set for deletions. In case of deletion, the stock would witness outflows of USD33.2mn (26 DTT). We view EMAARDEV DB and EMAARMLS DB as possible deletions, likely in the November 2019 rebalance. This would be driven by FAB UH’s FOL potential increase, pending regulatory approvals, raising the UAE’s cut-off and leading both stocks to exit.

No imminent changes in Egypt, Kuwait; Saudi Arabia’s Provisional index includes 30 stocks. We expect no changes in these countries’ IMIs for now. However, the closest candidate would be TMGH EY in Egypt, which rallied 12% y-t-d, 27% short of Egypt’s current cut-off. If this gap is bridged before the last 10 business days of Apr-19, the stock would capture a weight of 10.9%, with flows of USD85mn (64 DTT). For Saudi, the total passive inflows into the market, post the potential upgrade to EM status, stand at cUSD12bn, expected by May 2019 and August 2019.