MSCI is scheduled to announce its Quarterly Index Review (QIR) on August 12, 2024, and any changes in the index will be effective from September 02, 2024.
Pakistan’s weight will likely increase by 35-45 bps to 4.7- 4.8 percent from 4.2-4.3 percent after the likely addition of the four new scrips and an increase in the market cap of existing constituents by 9 percent, according to Topline Securities.
Based on details updated on the MSCI website, in the last review of May 2024, the minimum threshold of free float and total market cap for the selection of frontier market stocks was revised upward from US$ 57 million to US$ 63 million and US$ 114 million to US$ 126 million, respectively.
Any change in threshold is not known until the results are announced for that particular review and it is generally updated every quarter.
Likely Additions in August 2024 Review: In August 2024, Topline expects the addition of DG Khan Cement (DGKC), Sazgar Engineering (SAZEW), Faysal Bank (FABL), and Fauji Fertilizer Bin Qasim (FFBL) as their free float and market both are above the threshold used for last review by 6-27 percent.
There are also chances for the addition of Fauji Cement (FCCL). However, its free float is only 1.4 percent above the last review threshold. Any upward revision in free float or total market threshold by MSCI may result in deviation.
Deletions in August 2024 review: TRG fails to meet the total market cap requirement of US$ 126 million as its market cap in the last 10 working days has ranged between US$ 105- 117 million. However, with the help of the buffer rule, this company may also remain part of the index.
Inflow estimation: Theoretically, due to an increase in weight by ~35-45 bps and assuming an AUM size of US$ 5-10 billion tracking the MSCI FM index, we expect gross inflows of US$ 20- 45 million.