The 2021 return for the MSCI Emerging Markets Index was -2.5%, which was quite disappointing, especially compared to the 28.7% return for the S&P 500. One bright spot was the performance of six countries that make up the Gulf Cooperation Council, which is a political and economic alliance of six Middle Eastern countries – Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman. The MSCI GCC Countries Index (“GCC”) captures the performance from this group of countries.
The broad MSCI Emerging Markets Index underperformed the GCC countries by over 41%. Also, the GCC index has also outperformed the emerging markets index by over 4% on a three-year basis and over 3% on a five-year basis.
|Returns as of 12/31/2021||1 Year||3 Years||5 Years|
|MSCI Emerging Markets Index||-2.54%||10.9%||9.9%|
|MSCI GCC Countries Index||38.7%||15.1%||13.2%|
Common catalysts cited for the strong market returns include: higher oil prices, higher IPO activity and massive infrastructure ahead of the 2022 World Cup hosted by Qatar.
Unfortunately, for most investors, gaining exposure to this region is very difficult. One can gain some exposure through a variety of emerging or frontier market index offerings, but usually the weightings to this region are not substantial. As these GCC markets mature, investors will likely have broader access in the future.