The Dow Jones GCC index, a conventional benchmark, and the Dow Jones Islamic Market GCC index, were launched on Tuesday while credit rating firm Standard & Poors launched the S&P GCC 40 index the same day.
The provision of company earnings and valuation information by the indices reflects improvements in transparency and provides international investors with a means of comparing markets in the six-nation Gulf Cooperation Council, or GCC, and the MENA region — Middle East North Africa — with their international counterparts, analysts say.
"The overall interest in the region is on the rise and there are an increasing number of funds coming into the region," said Fahd Iqbal, GCC Strategist at EFG-Hermes. "These funds have their indexing and benchmarking needs and what we’re seeing is a reaction from companies that have a well-established reputation for providing benchmarks," he said. "The markets are growing and opening up so in general the indices will add transparency and international investor focus in the region," said Sybille Reitz, a spokeswoman for Dow Jones Indexes.
The new benchmarks launched by Dow Jones Indexes will cover companies from Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates, with the top four companies by market capitalization in the conventional index coming from Kuwait. Kuwaiti companies also represent the top five firms in the Islamic index. The UAE has the largest country weighting on the S&P index, with 12 companies, followed by Kuwait and Qatar.
The index also covers Bahrain and Oman. To provide equal exposure across GCC countries, the index limits the number of companies from any single country to 12.
