KARACHI: Morgan Stanley Capital International (MSCI) maintained Pakistan’s status within the MSCI Emerging Market Index, (EM) dispelling the long held market concerns that the country could be downgraded to Frontier Market (FM).
This was disclosed in the press release issued by the MSCI which also made no mention of any stocks being put under review. The presser issued early morning pertained to the results of MSCI Semi-Annual Index Review for the MSCI Equity Indices.
All three constituents of Pakistan, namely Habib Bank Limited (HBL), Oil and Gas Development Company (OGDC) and MCB Bank (MCB) managed to retain their status.
It sets at rest one of the major concerns of the market where analysts argued that the MSCI could downgrade Pakistan to FM from EM status, since the companies in the Standard Index fell short of the size requirement of EM.
The size had shrunk due to incessant decline of the market all through 2018 and 2019-to-date. Although Pakistan has managed to stave off downgrade, its weight in the MSCI EM has diminished to just 0.03 per cent, from 7-8 basis points since its inclusion in the EM in June 2017.
Only three Pakistani companies have been removed from the MSCI EM Small Cap Index including; Fauji Cement Company, Fauji Fertiliser Bin Qasim and International Steels Ltd.
Pakistan universe in MSCI now constitutes 22 companies including the standard three—HBL, OGDC and MCB.
Published in Dawn, May 15th, 2019