Invesco has unveiled a Ucits exchange-traded fund (ETF) that gives investors access to Kuwait’s equity market ahead of its inclusion in the MSCI Emerging Markets Index planned for the coming year.
The ETF provides exposure to around 85% of the market capitalisation in the Gulf state, including businesses in its various economic and cultural development projects.
In June this year, indices provider MSCI announced that it would be promoting Kuwait to its emerging markets index in 2020, subject to structural enhancements to the Kuwaiti equity market being completed by November this year.
Assuming this deadline is met, the country will enter the index with a weighting of around 0.5%.
According to Invesco, the inclusion could drive billions of dollars’ worth of flows into Kuwait equities, given that approximately $1.8 trillion of global assets use MSCI Emerging Markets as their benchmark.
Chris Mellor, head of Europe, Middle East and Africa ETF equity product management at Invesco, said: “With an index comprising financials, communication services, industrials, real estate and materials sectors, our new ETF offers investors the opportunity to gain exposure to those companies at the heart of the long-term transformation taking place in Kuwait.”
The country has pledged to diversify its economy, as currently more than half of its GDP comes from petroleum revenues.
Its “New Kuwait Vision 2035”, a seven-pillar programme, aims to transform the emirate with the creation of sustainable housing, developing infrastructure, improving healthcare services and education, as well as making the more government more transparent.
“In the shorter term, the inclusion into the MSCI Emerging Markets Index could drive significant inflows from asset managers needing to maintain benchmark weights,” Mellor said.
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