KARACHI, Oct 23: Standard and Poor’s (S&P) has launched new ‘Select Frontier Index’ that includes companies from emerging economies and has placed Pakistan at the top of the index in terms of weight of the companies.

S&P, the world’s leading index provider, on Tuesday announced the launch of the new index, the first investable index covering a broad range of frontier equity markets across emerging Europe, Asia, South America and the Middle East.

The index is comprised of 30 of the largest and most liquid companies from countries with smaller economies or less developed capital markets than traditional emerging markets, and as a result, have previously been excluded from most emerging market benchmarks and investment funds.The universe from which index candidates are drawn includes publicly listed companies from 11 markets in the S&P Emerging Market Data Base (EMDB) that are generally accessible to foreign investors but are excluded from the S&P/IFCI Emerging Markets Index.

The Select Frontier Index includes companies from Bulgaria, Cambodia, Colombia, Jordan, Kazakhstan, Pakistan, Panama, United Arab Emirates and Vietnam.

“The biggest country weightings include Pakistan (28.97pc), UAE (23.12pc), Jordan (13.23pc), Vietnam (11.54pc) and Panama (7.74pc), while the top three constituents are MCB Bank (Pakistan), Emaar Properties (UAE) and Copa Holdings (Panama),” stated S&P.

A company must have a minimum float-adjusted market capitalisation of $100 million, a minimum average daily value traded of $2 million and a minimum of 15 days traded over the previous six months to be eligible for inclusion in the Select Frontier index. Constituent weights are driven by liquidity and size.

The index has been designed to meet the needs of increasingly sophisticated investors seeking to create index-linked products for frontier markets, which have the potential for similar or greater returns than other better known developed and emerging markets.