U.A.E. May Win MSCI Emerging-Market Status Amid Limits on Stock Ownership

The United Arab Emirates’ improved securities settlement system may help MSCI Inc. (MSCI) overlook foreign-ownership limits and boost the nation to emerging-market status, Franklin Templeton Investment Management Ltd. said.

Introduction of the so-called delivery-versus-payment, a program for completing stock transactions, may spur MSCI to lift the U.A.E. from its frontier market ranking, said Joe Kawkabani, Franklin Templeton Investments (ME) Ltd.’s chief investment officer of equities in Dubai. Three other countries eligible for upgrades -- Qatar, South Korea and Taiwan -- probably will stay in their respective categories, analysts and investors said. MSCI is due to announce the decisions at 10 p.m. London time.

The U.A.E. has “solved most of the issues mentioned by MSCI,” Kawkabani of Templeton, which oversees about $54 billion in emerging markets, said in a June 19 phone interview. “If the U.A.E. becomes part of the MSCI emerging-markets index, it would have a very small weighting because of the foreign ownership limits. It’s still a big positive as it puts the U.A.E. on additional radar screens for investors.”