The change means they will no longer be associated with the high risk, high return of "wild west" frontier markets and could also mean $440 million worth of stock market inflows in the case of Qatar, according to Deutsche Bank estimates.
The upgrades were due to the "significant progress in enhancing the operational efficiency" of their stock markets, according to the MSCI press release, meaning better liquidity for investors. The move now puts UAE and Qatar on the same footing as the BRIC economies of Brazil, Russia, India and China.
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"It obviously broadens the investor base globally for those two markets, so it should have an overall positive spin in the future," Aziz Unan, the portfolio manager of a regional fund at Renaissance Asset Managers, told CNBC via email.
The upgrade has sparked excitement in the UAE's biggest city Dubai, according to Matthew Spivack, a practice leader at the Frontier Strategy Group. Visiting the country on business he told CNBC that the new status is "what everyone is talking about at the moment."
"In the short term, we expect a boost to business confidence as the biggest impact of the MSCI upgrade. However, we do not expect a major change beyond that for our clients operating in either market," he said.
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The excitement in Qatar - one of the richest countries in the world - might be more muted as the country has become embroiled in controversy surrounding its staging of the 2022 World Cup. However in the stock markets, a bit of patience and hard work has seemed to have produced results. The country is planning to raise the limit on foreign ownership on listed companies to 49 percent in the hope of driving further investment into the Gulf state.
The run up in both countries' stock markets gives further evidence that they are already seeing strong investment. In Qatar, the Doha Exchange has gained 50 percent during the past 12 months. In the UAE, the Abu Dhabi Security Exchange General Index is up by a similar margin and the Dubai Financial General Index is up 120 percent this year.
Rather than giving stock recommendations, Spivack advises multinationals on operations in the area. He told CNBC that the sectors he has seen the most interest in remain the government contractors, small and medium-sized businesses, other multinational corporations operating locally and consumers in the high-income bracket.
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Unan, meanwhile, has had stocks like First Gulf Bank, Emirates NBD, Union Bank of Abu Dhabi, Aramex and Mobily in his portfolio in the past, but has since been cast aside after reaching their target prices. However, he believes that he hasn't given up any possible exposure to the area.
"We would look to get back in when valuations become appealing again," he said.
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