MSCI Likely to Add At Least 3 More PSX Companies to Its Indices

MSCI is scheduled to release its results of the May 2024 Semi-Annual Index Review today (ie. May 14, 2024).

The announcement is expected to be made available shortly after 2 AM Pakistan Standard Time (PST) on May 15, 2024.

All changes will be implemented as of June 03, 2024.

Currently, the main Frontier Market Index comprises 20 constituents, including OGDC, MARI, PPL, LUCK, MCB, UBL, ENGRO, HBL, POL, SYS, FFC, HUBC, EFERT, MTL, BAFL, PSO, TRG, BAHL, ILP and SNGP.

Based on the market cap and free float minimum requirement of US$ 114 million and US$ 57 million, respectively, there is a likelihood that 3 companies will be added to the frontier market index, namely FCCL, ATRL, and NBP, Topline Securities said in a brief review.

It is important to highlight that for the May review, the price cut-off of MSCI is “any day data of the last 10 business days of Apr 2024”.

Due to this price cut-off methodology, the report wasn’t certain about the addition of CHCC and DGKC as during these cut-off days (Apr 17-30, 2024), their total market cap fell below the required US$ 114 million in a few days, however, there average market during these days remained above the threshold. Hence their inclusion also can not be ruled out.

While, INDU and MLCF also met the criteria last time in the February 2024 review and again fell in criteria this time, however, last time these were not added to the frontier market index. To highlight, MSCI considers various factors i.e. market liquidity, market accessibility, etc. before deciding on the inclusion of any security.

Topline remarked that with likely additions of these along with the KSE 100 performance since January 31, 2024 (+20% USD terms) from February 01 to April 30 vs. flattish performance of the MSCI frontier index, the overall weight of Pakistan will be increased, and will help in getting some foreign inflows.

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