S&P Dow Jones Indices announced Wednesday that following the results of its Country Classification Consultation that Morocco has been demoted to the frontier markets classification from emerging markets status.
Morocco was demoted to frontier status because “the lack of liquidity in Moroccan equity markets is a significant issue for market participants” and “the declining trend in market liquidity over the last several years does not align with other emerging markets, making it more appropriate to be classified as a frontier market,” said S&P Dow Jones Indices in a statement. http://us.spindices.com/
Five exchange traded funds currently feature exposure to Morocco, according to ETFdb.com. However, S&P’s decision to demote Morocco to frontier status is not likely to have a major impact on ETFs because the ETFs with largest weights to the North African nation – the Market Vectors Africa Index ETF (NYSEArca: AFK) and the WisdomTree Middle East Dividend Fund (NasdaqGM: GULF) – track in-house indices. Plus, those are regional ETFs, not explicit emerging or frontier funds.
MSCI (NYSE: MSCI) already considers Morocco to be a frontier market as highlighted by the country’s 5.4% weight in the iShares MSCI Frontier 100 ETF (NYSEArca: FM).
S&P Dow Jones Indices is the second index provider since September to announce a demotion of Morocco to the frontier classification.