MSCI relocates Lucky Cement, UBL to small-cap indexes

In an unexpected development Honda Atlas, Maple Leaf Cement removed

KARACHI: In line with market expectation, MSCI Inc – a leading provider of research-based indexes and analytics globally – has relocated two leading Pakistani stocks; Lucky Cement and United Bank Limited (UBL), to its small-cap indexes from mid-cap indexes with effect from December 1, 2018.

However, it has unexpectedly removed Honda Atlas and Maple Leaf Cement from MSCI Global Small Cap Indexes, according to the Geneva-based firm's November 2018 semi-annual equity indexes review results announced in wee hours (according to Pakistan time) on Wednesday.

Foreign investors having an estimated $1.4-1.7 trillion funds in hand, track the MSCI Emerging Market indexes to decide whether to invest or divest in the constituencies listed at stock markets around the globe.

"With this event, Pakistan's weight in the MSCI EM is expected to fall to 0.037% from earlier 0.055% (as of October 23, 2018), as per our workings," Topline Securities CEO Muhammad Sohail said in a post-results comment.



Therefore, Oil and Gas Development Company (OGDC) remained the only Pakistani stock which continued to maintain its position among large cap stocks in MSCI Emerging Market Indexes.

After relocation of two Pakistani stocks to small-cap indexes, there are only two other Pakistani stocks left among mid-cap stocks namely; Habib Bank Limited and MCB Bank.

After two Pakistan specific additions to mid-cap indexes and two deletions, the number of Pakistani constituencies in the indexes remained unchanged at 22, including;

• Bank Alfalah


• DG Khan Cement


• Engro Corporation


• Engro Fertiliser


• Fauji Cement


• Fauji Fertiliser Bin Qaism


• Fauji Fertilizer Company


• Hub Power Company


• Indus Motor


• Inter Steel Ltd


• Kot Addu Power Company Limited


• Lucky Cement


• Millat Tractors


• National Bank of Pakistan


• Nishat Mills


• Packages Ltd


• Pakistan Oilfields Limited


• Pakistan State Oil


• Sui Northern Gas


• Thal Ltd.


• The Searle


• United Bank Limited

In the back drop of the expected relocations, investors including the foreign ones continued to sell Lucky Cement and UBL shares for quite a long time.

AHL Research Head Samiullah Tariq told The Express Tribune that the recent massive sales across the board at the Pakistan Stock Exchange (PSX) have significantly slashed share prices of a number of stocks that resulted into reducing their market capitalisation, including those two relocated to small-cap indexes.

The reduction in market cap convinced Morgan Stanley Capital International (MSCI) to relocate the two.

Lucky Cement's share dropped 0.24%, or Rs1.15, and closed at Rs468.81 with 594,100 shares exchanged hands at the PSX on Tuesday.



UBL' share price slightly recovered 0.03%, or Rs0.04, to Rs137.09 with 954,400 shares traded at the bourse.

Honda Atlas fell 4.15%, or Rs10.29, to Rs237.50 with a turnover of 520,700 shares. Maple Leaf Cement improved 1.24%, or Rs0.62, to Rs50.60 with 3.70 million shares.

In total, MSCI would add 48 securities from its global standard indexes and delete 66 with effect from December 1, 2018.

Similarly, it would add a total of 249 constituencies and delete 324 from its global small cap indexes.