The recent upgrade of Qatar to emerging-market status by index compiler MSCI will further boost investor sentiment for the country’s rapidly-developing economy.
Inclusion in the MSCI emerging markets bracket tends to lead to big inflows from global stock market funds that track the index.
Such funds will likely start to invest only after the reclassification takes effect in May next year.
The MSCI Emerging Markets Index, which tracks $7.3tn (QR26.57tn) of equities around the world, is considered the premium list of growing markets, including countries such as China, Brazil and India.
Last week’s upgrade had already led to shares rally in Doha and the UAE, which was also upgraded to emerging-market status, stoking bets foreign investors will channel more money into equities in the oil-exporting region.
Stock markets in Qatar and the UAE rallied to multi-year highs after the MSCI upgrade announcement.
The upgrades have the potential to draw $800mn of new funds into Qatari and the UAE shares, according to HSBC.
MSCI raised Qatar and the UAE after they adopted changes including a buyer cash-compensation procedure, which enables investors to be paid in cash if a security is unavailable for delivery on settlement day.
Qatar, which is currently the world’s largest exporter of liquefied natural gas, has raised foreign-ownership limits of companies in its $141bn  stock exchange.
The market upgrade is seen as a major game changer for Qatar. Analysts believe the long-term benefits that accompany the upgrade include fund inflows and along with that come a “depth and breadth” of liquidity.
“It’s essentially a place on the map for these markets,” was how one analyst put it.
The elevation of the MSCI Qatar and MSCI UAE indices from frontier to emerging markets will coincide with the May 2014 semi-annual index review, MSCI said in its yearly market classification report published recently.
For Qatar, the index provider said it welcomed the progress made by the authorities to raise the limits on foreign ownership of companies listed on the Doha-based Qatar Exchange, but added that the current foreign ownership limits were still low by emerging market standards.
“Qatari authorities should actively continue to increase them above 25% in order to mitigate potential issues arising from increasing foreign capital inflows,” MSCI said.
Qatar Exchange had  welcomed the decision of the MSCI to upgrade the Qatari market, describing this decision as a positive step towards the development of Qatar Exchange and a milestone that will attract further foreign investments to the Qatari stock market.
Qatar Exchange CEO Rashid bin Ali al-Mansoori expressed his satisfaction to upgrade the rating of the Qatari market to emerging market, which he said clearly reflects the recognition of the positive steps made by Qatar Exchange over the past years to meet the MSCI requirements.