Pakistan is expected to be included in the MSCI Frontier Markets 100 Index.
Following the MSCI Semi-Annual Index Review, the announcement was made (SAIR).
The businesses that will be included in the FM 100 index have yet to be declared by MSCI.
Karachi: As part of its semi-annual index review (SAIR), index provider Morgan Stanley Capital International (MSCI) announced Thursday that Pakistan would be eligible for inclusion in its Frontier Markets 100 Index and the Frontier Markets 15% Country Capped Index in May 2022.
As part of the May 2022 Semi-Annual Index Review (SAIR), Pakistan will become eligible for inclusion in the MSCI Frontier Markets 100 and MSCI Frontier Markets 15% Country Capped indexes, based on feedback from market participants, MSCI said in a statement.
“Additional announcements may be made as needed.”
In September 2021, MSCI began conversations with foreign investors over Pakistan’s prospective inclusion in the FM 100 Index. The businesses that will be included in the FM 100 index have yet to be declared by MSCI.
According to the market, Lucky Cement, Hub Power Company, Engro Corporation, HBL, UBL, MCB, Fauji Fertiliser, Systems Limited, Mari Petroleum, Engro Fertilisers, and Pakistan Petroleum Limited are among the companies expected to make up the MSCI FM 100 Index.
The most heavily weighted member is Lucky Cement (0.46 percent), while Pakistan Petroleum is the least heavily weighted (0.22 percent).
In a market report, brokerage Arif Habib Limited projected that Pakistan had a 3.64 percent weighting in the MSCI FM 100 Index.
As a consequence of MSCI’s analysis, analysts expect foreign inflows of $75-95 million in May 2022, “although active flows may materialise before May 2022.”
In September, four years after being classified as an emerging market, MSCI demoted Pakistan to a frontier market.
While the Pakistani equity market satisfies the requirements for market accessibility under the emerging market categorization framework, it no longer meets the size and liquidity benchmarks, MSCI noted at the time.
However, Pakistan’s weighting in the MSCI Frontier Markets Index was lifted to 2.3 percent as a result of the decision. In addition, within a year, funds expanded their Pakistan holdings to 10%.
When compared to the other three components of the MSCI Frontier Markets Index, the MSCI Pakistan Index has a weight of 1.28 percent.
All 17 equities previously included in the Frontier Market Index from the Pakistan Stock Exchange (PSX) have maintained their positions in the MSCI Pakistan Standalone Index.
According to a statement from MSCI, the index has been enlarged to include just LOC Holdings of Sri Lanka.
According to experts, this might result in new inflows into the nation, which is already dealing with a ballooning current account deficit due to a large import bill and quickly depleted foreign exchange reserves.
“There may be some/modest foreign inflows as a result of this. Local investors, on the other hand, will continue to drive the market, as indicated by an expert.