Tuesday, January 31, 2023
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MSCI Retains Pakistan in the Emerging Market Index

Morgan Stanley Capital International (MSCI) maintained the status of Pakistan under the MSCI Emerging Market Index.

The company has released the results of the May 2020 Semi-Annual Index Analysis for MSCI Stock Indexes, including the MSCI Global Regular Index and the MSCI Global Small Cap, as MSCI disclosed improvements in its global index constituents.

From the country’s perspective, the MSCI Pakistan Index under the MSCI Global Standard Indexes did not change.

All three of Pakistan’s constituents, namely Habib Bank Limited (HBL), Oil and Gas Development Company (OGDC), and MCB Bank (MCB), have managed to maintain their position.

A.A.H Soomro, managing director at Khadim Ali Shah Bukhari Securities said, “This was a major sword hanging in front of us. COVID-19 has bought us time. Some investors would have wanted Pakistan to become part of Frontier Markets where it commands a higher weight. However, years of effort would have been undone and politically, it can also scar the government. Nonetheless, better to be a small fish in a bigger pond.”

The total number of Pakistani constituents remains at 16 under MSCI Global Small Cap Index. In a report, Topline Securities estimated that Pakistan’s weight is likely to be around 0.023 per cent, which was around 0.035 per cent at the time of the last February 2020 re-balance.

The minimum requirements for the emerging markets were lowered to a total market cap of $1,400 million (previously: $1,532 million) and a float market cap of $700 million (previously $766 million). For Pakistan, the Index Group Rule remains, with the Czech Republic, Egypt and Peru added to the list.

MSCI said that if there are no constituents left in accordance with the MSCI GIMI methodology such indexes may be discontinued.



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