IEMG - FM KWT: Kuwait Upgrade From 'Frontier' To 'Emerging' Unlikely Bullish For Either Fund

• Late last year, MSCI upgraded Kuwait from a "Frontier" to an "Emerging Market" status, and iShares launched the iShares MSCI Kuwait ETF.
• Around seven years ago, we saw a similar upgrade and iShares launch on two neighboring markets: Qatar and the UAE, with both benchmarks delivering negative total returns since.
• Kuwait remains heavily exposed to the oil cycle, and its 64% allocation to financials means you can't model Kuwait's returns without modeling its banks.
• Bottom line, the Kuwait ETF portfolio has a relatively low return on equity rate and valuation ratios that aren't that cheap, so does not seem like an attractive standalone investment for now.

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