MSCI adds 22 Pakistan firms to frontier market index

KARACHI: The stock market is likely to receive a boost as MSCI Inc. on Tuesday announced the inclusion of 22 Pakistani companies in its Frontier Market and Small Cap indexes, effective from Feb. 29.

The global index provider added three Pakistani firms - Bank Al Habib Ltd, Interloop Ltd and Sui North Gas Pipelines Ltd - to its Frontier Market Index, which tracks the performance of equity markets in 28 countries.

Nineteen Pakistani companies were added to the MSCI Frontier Market Small Cap Index, which covers about 14 percent of the free float-adjusted market capitalization of the Frontier Market Index.

Adamjee Insurance Company, Agritech Limited, Aisha Steel Mills, Askari Bank Limited, Century Paper & Board, Ferozesons Laboratories, Ghandhara Industries, Ghani Glass Limited, Hascol Petroleum Limited, IGI Holdings, JS Bank Limited, Murree Brewery, Nishat Chunian, Pakistan Cables, Pakistan Stock Exchange, Service Global Footwear, Sui Southern Gas Company, Treet Corp and Worldcall Telecom are included in Small Cap Index.

Four Pakistani companies - BankIslami Pakistan Ltd, Fauji Cement Co Ltd, Pak Suzuki Motor Co Ltd and Sui North Gas Pipelines Ltd - were removed from the Small Cap Index.

Topline Securities said in the MSCI Pakistan Frontier Market Small Cap index, 19 new constituents have been added, and 4 constituents have been removed. the total number of constituents in the MSCI Pakistan Frontier Market Small Cap index is 56.

"After this review, Pakistan’s weight in the Index is expected to be around 3 percent," the brokerage said. "Due to this adjustment, we anticipate some net flows, although the quantum will not be significant." it added.

In September 2021, Pakistan was downgraded from its status as an emerging market, a little over four years after it was reclassified from the Frontier Markets (FM) Index by MSCI.

The MSCI had said then that while the Pakistani equity market meets the requirements for market accessibility under the classification framework for Emerging Markets, it no longer meets the standards for size and liquidity.

Analyst said the index inclusion is a positive development for Pakistan's stock market, as it reflects the improved fundamentals and prospects of the local companies.