Argentina and Saudi Arabia get promoted

Article Excerpt

One of the benefits of investing in frontier markets is their potential to get “promoted” to emerging-market status. Once this happens, a much larger pool of money generally becomes available for investment in these markets. Recently, index provider MSCI decided to promote both Argentina and Saudi Arabia to “emerging market” status for its indexes. Those economies are expected to join countries such as China, India, Brazil and South Africa in the MSCI Emerging Markets Index for 2019. This means that billions of dollars from funds that track this index will be earmarked for investment in these markets. MSCI looks at various aspects when deciding whether a country can be upgraded. That includes the size and liquidity of a market, restrictions placed on foreign investors, the rules and regulations to protect those investors and the effectiveness of trading, settlement and custody operations. Saudi Arabia opened its $524 billion stock market to foreign investors three years ago. Since then, it has eased requirements for these investors…