Nearly a year of anticipation came to a close on 14 May when index compiler MSCI announced the UAE and Qatar stocks that would be included in its Emerging Markets Index.

Of a total of 19 stocks, nine are banks, which will give investors exposure to the region’s overall economies. Unsurprisingly, the second-largest category is real estate (four stocks), while the rest of the names operate in telecoms, power and water, industries and trade.

Once the markets are officially inducted on 1 June, all eyes will be on whether these stocks maintain their rapid growth.

With regional stock markets dominated by individual investors typically looking for short-term gains, many are hoping that foreign investors will flood the market and drive up prices. But if that does not instantly happen, investors may choose to sell-off now that share prices are high.

Dubai’s stock market has a price-to-earnings (PE) ratio of 18.6, higher than the GCC’s largest and most liquid bourse, Saudi Arabia, indicating that the emirate’s stocks have started to become expensive looking at the companies’ current results.

Qatar’s stock market may present better opportunities for value investors at a PE ratio of 16, though the exchange is largely illiquid.

While some argue that the markets have risen exponentially because investors are simply recognising companies’ true potential, there has clearly been an element of speculative trading in the names expected to meet MSCI’s criteria.

Investor sentiment is unpredictable, however, so it is possible that there will continue to be a willingness to buy regional stocks even when they are expensive. The question is how many of those will be foreign investors.