August 28, 2017 / 5:59 AM / in a year

MIDEAST STOCKS-Institutional funds may stay away as they await FTSE index changes

DUBAI, Aug 28 (Reuters) - Institutional funds may stay on the sidelines of Gulf stock markets on Monday because of a lack of fresh incentives and the approach of index compiler FTSE’s decision on changes to its emerging market index.

Brent oil has risen 0.4 percent to $52.62 a barrel while MSCI’s broadest index of Asia-Pacific shares outside Japan is up less than 0.1 percent.

FTSE is expected to announce the results of its September index review on Aug. 30, with implementation to take place by when the market closes on Sept. 15.

EFG Hermes expects Abu Dhabi’s Union National Bank to be deleted from the secondary emerging market index because it has been suffering from low liquidity. If it is removed, its shares could see up to $45 million of outflows. In Qatar, EFG Hermes expects Qatar Navigation (Milaha) to be removed from the index, also because of low liquidity.

UNB is down 7.1 percent since the start of the year, underperforming the local index, which is down 1.5 percent, while Milaha is down a little over one-third versus the Doha index’s 14.4 percent loss.

At the end of next month FTSE will announce its decision on whether to include Kuwait and Saudi Arabia in its secondary emerging market index. Analysts at Arqaam Capital believe the chances for both Saudi Arabia and Kuwait to meet FTSE’s inclusion criteria are high, but a bleak domestic economic outlook has been weighing on Saudi Arabia. (Reporting by Celine Aswad; Editing by Andrew Torchia)

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