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Inclusion in an emerging market benchmark and surging oil prices have helped Kuwaiti stocks outshine their regional peers in the past three months, but some major active emerging-market investors are waiting on the sidelines for more reforms.Next year, U.S. index provider MSCI will decide whether to reclassify its Kuwait index from the current frontier-market status to its widely used emerging-market benchmark.Boursa Kuwait, which took control of the Kuwait stock exchange in early 2016, introduced a number of reforms such as relaxing listing rules, delisting companies seen unfit for public investment and segmenting the market with different disclosure requirements."We have been looking at Kuwait for quite some time but it is a one-trick pony: oil, oil, oil," said Wim-Hein Pals, head of emerging markets at Rotterdam-based fund manager ROBECO which manages about $25 billion in emerging-market funds.He said Kuwait is not interesting enough in a diversified emerging-market portfolio for anyone who can find dynamic oil companies in other markets. Like its Gulf neighbors, Kuwait has kept its national oil company, Kuwait Petroleum Corp, out of public markets. Other funds contacted by Reuters said they will start looking at Kuwait after it has been added to the MSCI emerging market index.
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