MSCI Retains Pakistan in the Emerging Market Index

Morgan Stanley Capital International (MSCI) has maintained Pakistan’s status within the MSCI Emerging Market Index.

The firm has announced the results of the May 2020 Semi-Annual Index Review for MSCI Equity Indexes including MSCI Global Standard Index and MSCI Global Small Cap, as per which MSCI revealed changes in constituents of its global indices. All changes will be made as if the close of May 29, 2020.

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From Pakistan’s viewpoint, there were no changes in the MSCI Pakistan Index under the MSCI Global Standard Indexes.

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.

A.A.H Soomro, managing director at Khadim Ali Shah Bukhari Securities said,

This was a major sword hanging in front of us. COVID-19 has bought us time. Some investors would have wanted Pakistan to become part of Frontier Markets where it commands a higher weight. However, years of effort would have been undone and politically, it can also scar the government. Nonetheless, better to be a small fish in a bigger pond.

However, the following deletions were made in the MSCI Pakistan Index under the MSCI Global Small Cap Index:

Deletions: Nishat Mills (NML) and Sui Northern Company (SNGPL)
Additions: Mari Petroleum and Pakistan Petroleum (PPL)

The total number of constituents from Pakistan under MSCI Global Small Cap Index remain at 16. Topline Securities, in a report, estimated that Pakistan’s weight is likely to be around 0.023%, which at the time of the last re-balancing on February 2020 was around 0.035%.

The minimum criteria for emerging markets have been reduced to $1,400 million total market cap (previously: $1,532 million) and $700 million float market cap (previously $766 million). The Index Community Rule remains for Pakistan, with the Czech Republic, Egypt and Peru added to the list.

MSCI said that such indexes may be discontinued if there are no constituents left in accordance with the MSCI GIMI methodology.



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