Index reclassification delayed
COVID-19 puts hold on preparation
LONDON, April 9, (Agencies): MSCI Inc (NYSE: MSCI), a leading provider of research-based indexes and analytics, announced Wednesday that it will postpone the implementation of the reclassification of the MSCI Kuwait Indexes to Emerging Markets until the November 2020 Semi-Annual Index Review (SAIR). While the Kuwaiti equity market remains functional the decision to postpone is related to the impact that the COVID-19 pandemic is having on the ability of international institutional investors to fully perform all the preparation work required ahead of the implementation.
MSCI would like to emphasize that the MSCI Kuwait Indexes continue to meet all the necessary criteria for a classification in Emerging Markets but temporary measures that have been introduced globally by different authorities, corporations and institutional investors which aim to mitigate the COVID-19 pandemic may result in significant operational challenges around the required preparation to implement the index reclassification as part of the May 2020 SAIR.
Market participants have recently highlighted that they were experiencing difficulties as a result of COVID-19 measures in the process of opening accounts required to trade Kuwaiti stocks. Hence, there is an increasing concern that these investors will not have their accounts open in time and will not be able to implement the reclassification during the May 2020 SAIR.
Given these challenges and the ongoing uncertainty that has been created by the COVID-19 pandemic, MSCI decided to extend the lead time ahead of the implementation of the reclassification of the MSCI Kuwait Indexes from Frontier Markets to Emerging Markets. MSCI deems this postponement necessary to ensure a smooth reclassification implementation for both international institutional investors and local stakeholders.
As a reminder, on Jan 31, 2020, MSCI announced the launch of the MSCI Provisional Kuwait Indexes and the details of the Special Treatment to the MSCI Kuwait Indexes. MSCI will also extend the calculation of the MSCI Provisional Kuwait Indexes and the application of the Special Treatment until the November 2020 SAIR.
MSCI has updated the GIMI Methodology
available at https://www.msci. com/index-methodology and the Q&A document available at https://www. msci.com/market-classification to reflect the postponement of the implementation of the MSCI Kuwait Indexes reclassification.
About MSCI
MSCI is a leading provider of critical decision support tools and services for the global investment community. With over 45 years of expertise in research, data and technology, we power better investment decisions by enabling clients to understand and analyze key drivers of risk and return and confidently build more effective portfolios. We create industry-leading research-enhanced solutions that clients use to gain insight into and improve transparency across the investment process. To learn more, please visit www.msci.com.
Kuwait Capital Market Authority announced on Thursday that Morgan Stanely had delayed enlisting shares of the Kuwaiti companies in its benchmark (MSCI) for emerging markets from May 2020 to November this year.
The CMA said in a statement that Morgan Stanley had clarified that the decision to delay the inclusion was taken due to grave repercussions of the coronavirus spread, affecting capacities of major investors.
The agency has re-affirmed the State of Kuwait eligibility for promotion under the MSCI benchmark, the CMA said, adding that precautionary measures taken by many states, companies and key investors throughout the world to stem the virus limited operation capacity of the parties involved in entry of the Kuwaiti companies in the indices in May 2020.
The CMA statement added that the MSCI indicated that the involved parties noticed effect of these precautions on speed of opening accounts that guarantee entry of all the key investors ahead of execution in May 2020.
Moreover, due to the current hard and complex conditions prevailing across the world, there must be ample preparation for this event.
Morgan Stanley earlier Thursday decided to delay the enlisting of Boursa Kuwait in its key index on emerging markets to the bi-annual review in November instead of May.