KARACHI: Morgan Stanley Capital International (MSCI) Inc announced an addition of a record 56 Pakistani companies to its Frontier Market (FM) Index and FM Small Cap Indexes, which increased the country’s weight in the emerging markets category.
MSCI said in its results of the August 2023 index review that it added 15 Pakistani companies to its Frontier Market Index, which features large and mid-cap stocks from 28 countries.
The list includes Bank Alfalah, Engro Fertilizers, Fauji Fertilizer Co, Habib Bank, Hub-Power Co, Lucky Cement, Mari Petroleum, MCB Bank, Millat Tractors, Pakistan Oilfields, Pakistan Petroleum Limited, Pakistan State Oil Co, Systems, TRG Pakistan, and United Bank.
In the MSCI FM Small Cap Indexes, which cover small-cap stocks from 29 countries, MSCI added 41 Pakistani companies including Air Link Communication, Attock Cement Pakistan, Attock Refinery, Avanceon, Bank Of Punjab, BankIslami Pak, Cherat Cement, Cnergyico Pk, Engro Powergen Qadirpur, Fauji Cement Co, Fauji Fertilizer Bin Qas, Faysal Bank, Gul Ahmed Textile Mills, Honda Atlas, Hum Network, International Ind International Steels, Jahangir Siddiqui & Co, Khan (DG) Cement Co, Kohat Cement, Kot Addu Power Company, Lalpir Power, Maple Leaf Cement, Mughal Iron & Steel Ind, National Foods, National Refinery, Netsol Technologies (PK), Nishat Chunian Power, Nishat Mills, Nishat Power, Pak Aluminium Bev Cans, Pak Elektron, Pakistan Intl Bulk, Pakistan Refinery, Pioneer Cement, Searle Pakistan, Shell Pakistan, Sui North Gas Pipelines, Tariq Glass Industries, TPL Properties, and Unity Foods.
The changes will take place as of the close of August 31, 2023, MSCI said. Experts suggested this should increase Pakistan’s weight from 0.68 percent to around 2.7 percent in the MSCI FM Index.
“Among all the countries, Pakistan has experienced the most significant increase in weight in the FM Standard Index i.e. +2.1 percent,” said Arif Habib Limited, a brokerage house, in a report.
“In contrast, heavyweight countries like Morocco, Romania, and Kazakhstan have witnessed a decline of 1.2 percent, 1.0 percent, and 1.1 percent, respectively,” it said.
The brokerage house expects the MSCI review to have a positive impact on the market sentiment and foreign inflows.
Pakistan was reclassified as a frontier market in November 2021, after being downgraded from its status as an emerging market due to its failure to meet the standards for size and liquidity.
Since then, Pakistan has seen a revival of foreign interest in its equities. In the last six weeks, foreign corporates have done net buying of $27 million, according to Topline Securities.
The brokerage house said in a note that the MSCI review was a surprise move that would boost Pakistan’s attractiveness for global investors.
“With addition of 15 stocks into MSCI FM index, the index has now a total of 17 constituents,” it said.
“Similarly, MSCI FM Small Cap index has now a total of 41 constituents.” The brokerage said Pakistan’s central bank has been smooth in remitting foreign portfolio investment funds despite the foreign exchange issues faced by the country.