MSCI to add Pakistan to FM 100, FM 15% Country Capped index

KARACHI:

The Morgan Stanley Capital International (MSCI) has announced to add Pakistan into MSCI Frontier Markets 100 and MSCI Frontier Markets 15% Country Capped indexes in May as global investors showed willingness to invest in local businesses.

On Thursday, MSCI announced the conclusion of its consultation on the eligibility of the MSCI Pakistan Index for the MSCI Frontier Markets 100 and MSCI Frontier Markets 15% Country Capped indexes.

“After the feedback received from the market participants, Pakistan will become eligible for inclusion in the MSCI Frontier Markets 100 and the MSCI Frontier Markets 15% Country Capped indexes as part of the May 2022 Semi-Annual Index Review (SAIR),” the global indexes and analytics provider said in a brief statement on its official website.

“Further announcements may occur as needed.”

“We can expect foreign inflows in the range of $75-95 million in May 2022 while the active flows could materialise before May 2022,” Arif Habib Limited Head of Research Tahir Abbas projected in a preview to MSCI consultation results announcement.

Foreign investors, who track the MSCI FM 100 index, are managing funds in the range of $2-2.5 billion globally.

MSCI initiated consultation with global investors over potential inclusion of Pakistan in FM 100 index in September 2021.

“Pakistan’s weight in MSCI FM 100 index is estimated at 3.64%,” Abbas said in a post MSCI consultation results announcement commentary.

MSCI has not announced Pakistani constituents for FM 100 index, he said.

As per AHL’s working, a total of 11 constituents from Pakistan are expected to be added to the MSCI FM 100 index. The companies include Lucky Cement, Hub Power Company, Engro Corporation, HBL, UBL, MCB, Fauji Fertiliser, Systems Limited, Mari Petroleum, Engro Fertilisers and Pakistan Petroleum Limited.

The highest weighted constituent will be Lucky Cement (0.46%) while the lowest weighted company will be Pakistan Petroleum (0.22%), he said.

To recall, MSCI reclassified the MSCI Pakistan Index in the MSCI Frontier Markets Index in one step coinciding with the November 2021 Sami-Annual Index Review (SAIR), according to the latest statement of MSCI.

The analytics provider held quarterly index review of its Frontier Markets Index and announced its results in early hours on Thursday (PST).

As per the result announcement, no Pakistani company was deleted from MSCI Pakistan index in Frontier Markets Index, nor was any new company added from the country, according to the MSCI Quarterly Index Review February 2022.

Accordingly, all three previously included stocks namely Lucky Cement, MCB and HBL have retained their position in MSCI Pakistan index.

MSCI Pakistan Index’s weight with the three constituents in the MSCI Frontier Markets Index stood at 1.28%, the analyst said.

It also made no changes in MSCI Pakistan Standalone Index. Accordingly, each of the 17 previously added companies from the Pakistan Stock Exchange (PSX) to the FM index retained its positions.

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