KARACHI: Pakistan is now eligible for MSCI’s Frontier Market (FM) 100 and FM 15 per cent country-capped indices, the global investment index provider said on Thursday.
As a result, companies from Pakistan are now qualified to become part of the two indices in MSCI’s May 2022 Semi-Annual Index Review.
“This can attract limited foreign inflows. However, the market will continue to be driven by local investors,” said Fahad Rauf of Ismail Iqbal Securities.
Indices by MSCI help passive investors allocate their funds in a variety of equity markets around the world.
MSCI has not yet notified Pakistan’s weight in FM 100 and FM 15pc country-capped indices. However, as per MSCI’s last simulated index in 2021, Pakistan is likely to have a weight of close to 5-6pc in the FM 100 Index and 2-3pc in the FM 15pc Country-Capped Index, said Umair Naseer, associate director of research at Topline Securities.
The latest update on MSCI’s quarterly index review notified no change in the constituents for Pakistan in the main FM Index or Small-Cap Index. MSCI did not notify weight for Pakistan in the FM Index either. However, Mr Naseer expects no major change given that there was no addition or deletion with regard to the main FM index.
MSCI had notified a 1.25pc weight to Pakistan in the FM Index in its semi-annual review held in November last year. Current constituents from Pakistan in the MSCI FM Index include Lucky Cement Ltd, Habib Bank Ltd and MCB Bank Ltd.
The country was reclassified to the Frontier Market from the Emerging Market in September last year as it did not meet the standards for size and liquidity.
Published in Dawn, February 11th, 2022