Qatar’s stock market registered the highest amount of foreign inflows in the region in May, according to research by Dubai-based brokerage firm Mubasher Trade.

Net buying of Qatar Exchange-listed stocks by foreigners totalled $662m in May, followed by $391m in Abu Dhabi, $139m in Dubai, $124m in Kuwait and $33.2m in Oman. In total, regional stocks attracted $1.2bn in foreign investment, compared with $284m in April.

Saudi Arabia and Egypt were the only markets where foreign buying was not as strong, leading to net selling of $141m and $10m respectively.

The developments took place ahead of the Qatar and UAE’s official upgrade to ‘emerging markets’ status by index compiler MSCI on 1 June.

The upgrade is set to lead to volatility in the coming months as liquidity is rebalanced. Foreign, passive investors tracking the emerging markets index will have six months to include the UAE and Qatar into their portfolios, while some retail investors are expected to sell off their stocks and cash in on their profits ahead of a slower summer period.

Dubai’s stock market dropped 6.2 per cent month-to-date, while Abu Dhabi lost 5.8 per cent and Qatar decreased 5.3 per cent. Bahrain and Kuwait dropped 0.6 per cent and 0.5 per cent respectively. Markets that are still in the green are Egypt (up 4.3 per cent) and Oman (up 1.1 per cent).

It is likely Qatar and the UAE will quieten down after the boost by the status upgrade, further underscoring the need to further improve the markets and encourage fresh listings in order to attract more attention from foreign investors. At the moment, the UAE and Qatar represent just over 1 per cent of the emerging markets index.