Global index builder MSCI added a total of five UAE companies to two of its indexes in its latest rebalancing of key GCC indexes. The changes will all come into effect after market close on Friday, 30 May. The rebalancing — which happens every three months in February, May, August, and November — did not see any UAE equities removed from the indexes.

The regional picture: Across the rest of the region, a total of seven Saudi companies were added and another three were removed across two different indexes, while in Oman a total of two companies were added and three were removed from the indexes. Additions from our neck of the woods are primarily focused in construction, energy, and public utilities.

REFRESHER- MSCI indexes are widely used benchmarks for global equity markets and stakeholders including institutional investors, portfolio managers, and financial advisors. Investors use the indexes as gauges of market performance, as benchmarks against which to compare other stocks or markets, and to build index tracking funds, among other purposes. To be added, a company must first be listed in an MSCI-designated Emerging Market country, meet minimum market cap thresholds, and boast strong liquidity (with an annualized traded value ratio of at least 15%); without having major restrictions on foreign ownership.

Adnoc Gas + Salik + Dewa join emerging markets index: ADX-listed Adnoc Gas, DFM-listed Dubai Electricity and Water Authority (Dewa), and Dubai’s toll gate operator Salik were all added to the MSCI Emerging Markets Index (pdf). Adnoc Gas’ inclusion makes it the third Adnoc subsidiary to join the index, after Adnoc Distribution joined the index in 2021 and Adnoc Drilling followed last year. Its inclusion follows the secondary sale of a 4% stake in the firm to institutional investors in February, which raised its freefloat to 9%, up from 5%.

Why it matters: While getting added to the MSCI indexes attracts investor attention to the company’s stocks, being excluded isn’t necessarily a sign for concern given that it could be based on not meeting specific index criteria, including a change to the company’s structure, amongst other things. Adnoc Gas’ addition to the index could boost passive inflows by USD 300-500 mn, as well as “drive greater liquidity” to its stock, the company said in a statement (pdf). For Dewa, the inclusion is expected to bring “increased visibility, enhanced trading liquidity, and passive inflows from index-linked investment products,” with analysts suggesting that it could also see “notable inflows from global asset managers,” according to a statement (pdf).

MEANWHILE- Apex Investment and Bank of Sharjah were also added to the MSCIGCC CountriesSmall Cap Index(pdf). No UAE companies were removed from the index.

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