KARACHI: The much-awaited Morgan Stanley Capital International (MSCI) semi-annual index review was announced late Tuesday night which was broadly in line with market expectations.

There were two deletions from the MSCI Global Standard Index as United Bank Ltd and Lucky Cement were moved to the Global Small Cap Index. That leaves three Pakistan corporates — Oil and Gas Development Company, Habib Bank and MCB — still in the MSCI Emerging Market (EM), dispelling fear that all of the country index would be relegated back to the MSCI Frontier Market (FM).

Along with these two companies, Maple Leaf Cement and Honda Cars were deleted from the MSCI Global Small Cap Index.

The changes would be effective from Nov 30.

The deletion has reduced Pakistan’s weight in EM to 0.046 per cent, from 0.10pc at the time of promotion to MSCI EM in May last year.

The country’s weight in the small cap index has been revised to 1.02pc with 24 domestic companies remaining.

UBL and Lucky have been excluded due to their total market capitalisation and free flat market capitalisation falling short of the required criteria. Some analysts expected foreign outflows amounting to $20-22m on the exclusion of these two. On Wednesday, National Clearing Company of Pakistan recorded foreign sale of stocks worth $8.52m, but they were absorbed by local institutional and individual players.

To recall, the great expectations of a massive inflow following the reclassification of Pakistan Index effective June 1, 2017 from MSCI FM to EM had turned sour and the market is still reeling under the selling pressure.

Published in Dawn, November 15th, 2018