Kuwait has become the latest country to receive the coveted emerging markets status from MSCI, in a move that is expected to result in billions of dollars of investor inflows into the Gulf country's stocks.

MSCI, the world's top equity indexing provider, said in a statement late on Tuesday that it would reclassify its MSCI Kuwait Index benchmark to emerging markets status.

Kuwait was previously classified as a frontier market. The upgrade, which comes following MSCI's latest market classification review, will see nine Kuwaiti blue chips included in MSCI's emerging markets benchmark from May next year, with an index weighting of 0.5 per cent .

MSCI's emerging markets index is tracked by about $1.9trn in investment funds globally.

The reclassification of Kuwait as an emerging market could see the country's stock market lure an additional $2.8bn in passive investment flows, according to NBK Capital. In comparison, China's much larger equity markets is expected to see $125bn in inflows as its presence in the emerging markets benchmark expands.

NBK Capital said that the upgrade for Kuwait could boost liquidity, corporate governance and earnings growth in the Gulf nation's equity market. The upgrade is subject to the Kuwait market meeting certain stipulations and reforms.

In the year through to May 31, Kuwaiti stocks returned 22 per cent, versus 4 per cent for emerging markets overall.

The Gulf bourse's biggest names include National Bank of Kuwait and global logistics business Agility.

source: FT