Pakistan to enter FM 100 index in May

Global investors show willingness to invest in Pakistani businesses

KARACHI:

Morgan Stanley Capital International (MSCI) has announced that it will add Pakistan to the MSCI Frontier Markets 100 and MSCI Frontier Markets 15% Country Capped indexes in May as global investors have shown their willingness to invest in the country’s businesses.

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

“After the feedback received from 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,” the global indexes and analytics provider said in a brief statement on its official website.

“Further announcements may occur as needed,” it said.

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

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

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 the potential inclusion of Pakistan in the FM 100 index in September 2021.

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

MSCI has not announced Pakistani constituents for the FM 100 index, he pointed out.

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

The constituent with the highest weight will be Lucky Cement (0.46%) while the lowest weight will be allocated to Pakistan Petroleum (0.22%), he said.

Earlier, MSCI reclassified the MSCI Pakistan Index in the MSCI Frontier Markets Index in one step coinciding with the November 2021 Semi-Annual Index Review, according to the latest statement of MSCI.

The analytics provider held a quarterly index review of its Frontier Markets Index and announced results in the early hours of Thursday (Pakistan time).

No Pakistani company was deleted from the MSCI Pakistan index in the 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 Bank and HBL retained their position in the 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 the MSCI Pakistan Standalone Index. As a result, all the 17 previously added companies from the Pakistan Stock Exchange (PSX) kept their positions in the FM Index.

Published in The Express Tribune, February 11^th, 2022.

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