JPMorgan Chase & Co. has announced that it will remove the United Arab Emirates from its major emerging market bond index. This move affects major benchmarks. Includes the EMBI Global Diversified Index. The UAE currently accounts for around 4.1% weighting in the index.
🇦🇪 Update: JP Morgan to exclude UAE from emerging market bond index
JPMorgan will remove the United Arab Emirates from its major emerging market bond index after the country exceeded the bank’s asset holdings threshold for the third year in a row.
UAE currently accounts for 4.1%… pic.twitter.com/twFDtGkEF5
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The bank will carry out the demolition in four stages starting March 31st, with full completion expected by June 2026. JPMorgan said the changes come after the UAE surpassed the wealth threshold for the third year in a row. This marks a transition to developed market status.
Why UAE is graduating
JPMorgan regularly reviews each country to determine whether it still qualifies as an emerging market. The main trigger is income level. If a country’s per capita income exceeds the bank’s criteria for three consecutive years. Then you can delete it. That’s exactly what happened in the UAE. The country’s gross national income per capita remains well above the required level. This is supported by strong oil revenues, growing tourism and economic diversification.
The UAE also has a high credit rating in the AA range. In many ways, this move reflects economic success rather than economic weakness. Similar reclassifications recently affected Qatar and Kuwait. It was also phased out of the emerging market index as economies matured.
Phased deletion timeline
JPMorgan is planning a gradual exit to avoid sudden market shocks. UAE’s weight will be reduced equally in four stages from March 31, 2026 to June 30, 2026. Meanwhile, the country will leave the small euro-denominated emerging market bond index completely on March 31. Importantly, after this announcement, new UAE bond issues will no longer be included. Existing bonds simply disappear through gradual reductions. This step-by-step approach gives asset managers time to adjust their portfolios. It also helps reduce volatility that can arise from sudden forced sales.
Market impact and investor flow
The decision is important because hundreds of billions of dollars track JPMorgan’s emerging market bond benchmark. Passive funds and ETFs that track the index will likely need to reduce their exposure to the UAE over the coming months. In the short term, this could lead to modest outflows and some widening of bond spreads.
However, analysts expect the impact to remain manageable due to the gradual nature of the timeline. In the long term, this change could actually help the UAE. Breaking out of the emerging market confines could attract investors from developed markets. People who previously could not afford the national debt. This could support borrowing costs in the long term.
A milestone for the UAE
This reclassification highlights how far the UAE economy has come. The share of Gulf countries in the emerging market bond benchmark will also decrease slightly. The weight of this index has shifted towards riskier economies. So far, the market appears to have calmed down following the announcement. A staged exit gives investors time to change positions without major disruption. More broadly, this move illustrates how global bond indexes continue to evolve. As rapidly growing economies move up the income ladder.
