GCC nations, Islamic debt assets to receive billions as region diversifies from oil

Debt markets in Gulf Cooperation Council (GCC) countries have historically been unable to qualify for inclusion in emerging-market fixed income indexes or any other major fixed income index, which has resulted in lost investment in the region. But that’s all about to change. Next year, GCC countries are slated for inclusion in the prominent J.P. Morgan Emerging Market Bond Index (EMBI), marking a high water point for both the region and the larger fixed income universe. J.P. Morgan is planning to add sovereign and quasi-sovereign debt issuers from Saudi Arabia, Qatar, the United Arab Emirates, Bahrain, and Kuwait to the index between January 31 and September 30, 2019. This change will bring all GCC member states into the index, which is a key performance benchmark for emerging market investors. According to J.P. Morgan’s analysis, the GCC region could represent 12 percentage points in the index by the time the new GCC countries are phased in, which means upwards of $20 billion in cash inflows into the region. This could bring total index representation from the Middle East up to 18%, putting it on the same level as emerging markets in other regions like Europe (22%) and Asia (17%). Why the