FTSE Group has added the United Arab Emirates as a 'secondary' emerging market within its global equity index series, which the index provider says is the first time the country has been added in a global equity universe.

UAE and other Gulf states such as Qatar are generally classified as 'frontier' markets, a classification seen riskier than major emerging markets such as China and India.

'The announcement highlights structural improvements made to UAE financial markets and is an important step for the market's global recognition,' Jonathan Cooper, FTSE Group's managing director for Middle East and Africa, said in an emailed statement.

Additions to globally recognised index groups is seen as a positive since it forces passive funds tracking the index to allocate more money and provide more room for active funds to add to their investments.   

Changes to the UAE's classification will be implemented after the markets close on Friday and take effect at the start of trading on Monday, FTSE Group said.   

'This decision is long awaited and should boost confidence in both domestic and international investors, as the UAE market continues to evolve and attract international attention,' said UAE market regulator Securities and Commodities Authority (SCA) in the statement.

In June, another index provider MSCI Inc, maintained the UAE and Qatar stock markets as frontier markets in its 2010 annual market classification review, dashing market hopes for an upgrade to emerging market status. - Reuters