Gulf states United Arab Emirates (UAE) and Qatar are still not ripe for an upgrade to "emerging market" from "frontier market", index provider MSCI said Wednesday when announcing its semi-annual review of both markets.

"The MSCI UAE Index and MSCI Qatar Index will remain under review for potential reclassification to Emerging Markets, at the next Annual Market Classification Review in June 2013," MSCI said in an e-mailed statement.

Both market measures will remain constituents of the MSCI Frontier Markets Index, along with countries like Serbia, Tunisia, Argentina or Vietnam.

On UAE, MSCI said, "The MSCI UAE Index meets all requirements besides specific market accessibility issues related to custody and clearing and settlement," noting that international institutional investors often establish segregated custody and trading accounts in Qatar and in the UAE to mitigate the risk from local brokers having unlimited access to the trading accounts.

"This dual account structure results in significant operational burdens associated with the need to transfer shares from one account to the other prior to trading," said MSCI, adding that the UEA market regulator is expected to remove this hurdle in 2013.

Regarding Qatar, MSCI said "the issue around the very low foreign ownership limit levels imposed on Qatari companies is expected to be the only remaining impediment to the reclassification of the MSCI Qatar Index to Emerging Markets."

An upgrade to the level of "emerging market" would have triggered new investments into UAE stock markets in Dubai and Abu Dhabi and into shares listed at Qatar Exchange in Doha. The MSCI Emerging Market Index tracks around 3.2 trillion U. S. dollars worth of global equities, including those from the stock exchanges in the BRIC (Brazil, Russia, India, China). Enditem