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December 12, 2008
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Friday
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Zilhaj 13, 1429
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MSCI removes Pakistan’s stock index
By Our Equities Correspondent
KARACHI, Dec 11: MSCI Barra, a leading provider of investment decision support tools worldwide, including indices and portfolio risk and performance analytics, announced on Thursday that it would remove the MSCI Pakistan Index from the MSCI Emerging Markets Index as of the close on December 31, 2008.
MSCI Barra would maintain the MSCI Pakistan Index as a standalone index after its removal from the MSCI Emerging Markets Index. As a reminder, the MSCI, said in a statement that international equity indices were constructed and managed with an objective of being fully investable from the perspective of international institutional investors.
“The deterioration of investability conditions in the Pakistani equity market since the imposition of the “floor rule” at the end of August 2008, which has resulted in the practical shutdown of the equity market, and the continued lack of visibility regarding a potential re-opening of the market have made the continued inclusion of the MSCI Pakistan Index in the MSCI Emerging Markets Index untenable”.
The statement said that during the last three months, by preventing securities from trading on the exchange below the closing prices of August 27, 2008, the “floor rule had led to the near total paralysis of market activity and caused significant distortions to investors’ portfolio valuations by maintaining prices at artificial levels.”
Indications of action for a possible lifting of the “floor rule” continue to change course frequently, the MSCI observed and added: “Even if the “floor rule” were to be lifted, it is likely to take some time for the market to begin operating normally and for investors and MSCI Barra to assess whether the return to investability is sustainable.”“If and when the investability conditions return to more normal levels, MSCI Barra will, in due course, reassess the situation and consult with international institutional investors on the inclusion of the MSCI Pakistan Index in the appropriate MSCI international equity indices, including the MSCI Frontier Markets Index,” the MSCI Barra statement concluded.
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