UAE is too rich to be an emerging market, says US bank

Vijay Valecha, February 24, 2026, Khaleej Times

JPMorgan Chase & Co. on Tuesday said it would remove the UAE from its emerging-market bond indexes as the country surpassed the US bank’s measures of wealth for three consecutive years.

It cites findings from Partnerships Bulletin, which ranks Saudi Arabia as second in the global emerging markets pipeline for PPP projects up to July 2025, and also places Dubai in the top 10.

Bloomberg reported that the UAE, which accounted for 4.1 per cent of JPMorgan’s global diversified EM bond universe, will make its exit in four equal decrements.

JPMorgan said in a statement that the country will also fully leave the euro-denominated bond grouping, where it has a 1 per cent weight on March 31.

Vijay Valecha, CIO, Century Financial, said JPMorgan that this technical adjustment reflects improved economic fundamentals, strong sovereign balance sheets, and higher income levels that make the UAE less representative of traditional emerging markets.

“For three consecutive years, the UAE exceeded JPMorgan's criteria of GNI per capita and purchasing power parity. The consequence is significant as UAE sovereign bonds will no longer be benchmarked against Brazil, Turkey, or South Africa,” he added.

He explained that the UAE already shows many attributes of a developed economy. “The GNI per capita is similar to Southern European peers. Moreover, foreign exchange reserves remain robust, and the sovereign credit is a solid AA, in line with investment-grade peers. Meanwhile, the Abu Dhabi and Dubai financial markets have matured considerably. The robust markets attract institutional capital that was once directed towards traditional developed markets.”

What does it mean for investors?

Valecha sees the UAE could also be included in developed market indices run by MSCI or FTSE over time. “This could open the door to a substantially larger pool of DM capital, boosting the economic strength of the country further.

Investment flows

In the short term, Valecha said exclusion from the EM bond index may reduce passive inflows tied to that specific benchmark, but over time, it signals market maturation that can attract a broader spectrum of global investors.

“The UAE’s strong growth, especially in non-oil areas like tourism, trade, and financial services, along with solid public finances and stable external accounts, has made it more like an advanced economy. These changes can help bring in more types of investors, attract better quality capital, and strengthen the UAE’s reputation as a top global investment spot,” he said.

In summary, JPMorgan’s reclassification boosts the UAE’s reputation in global finance and marks its shift from an emerging market to a more advanced economy, Valecha concluded.

Source

Khaleej Times