Frontier markets are smaller, more undeveloped and riskier than emerging markets, and Friday index provider MSCI Barra announced that not only will it consider upgrading Kuwait, Qatar and the United Arab Emirates to emerging markets from frontier markets (expect a final decision by June 2009), but that it will further consider downgrading Argentina and Colombia to frontier markets from emerging markets “unless significant improvements in the relevant capital flow restrictions are observed” by December (despite Moody’s announcement that Colombia’s debt rating will be raised just one notch below investment grade).  As far as definite downgrades, MSCI said that it will reclassify Jordan to a frontier market from its current designation as an emerging market starting this November, because of the small size of the nation’s market and the lack of liquidity.

More than $3 trillion is benchmarked to the MSCI International Equity Indices, and the MSCI Emerging Markets Index is one of the most widely used indices to gauge the performance of emerging equity markets.  The iShares MSCI Emerging Markets ETF tracks the performance of the index.