• Pakistan to be eligible for inclusion MSCI Frontier Markets 100 Index.
• Announcement got here following MSCI Semi-Annual Index Evaluate (SAIR).
• MSCI has not but introduced the companies that will be included in the FM 100 index.
  

KARACHI: Index supplier Morgan Stanley Capital Worldwide (MSCI) has introduced Thursday that Pakistan will be eligible for inclusion in its Frontier Markets 100 Index and the Frontier Markets 15% Nation Capped Index in May 2022 as a part of its Semi-Annual Index Evaluate (SAIR), The Information reported.

“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),” MSCI mentioned in a press release.

“Further announcements may occur as needed.”

MSCI initiated discussions with worldwide traders in September 2021 relating to Pakistan’s potential inclusion in the FM 100 Index. MSCI has not but introduced the companies that will be included in the FM 100 index.

Nevertheless, the market expects Fortunate Cement, Hub Energy Firm, Engro Company, HBL, UBL, MCB, Fauji Fertiliser, Techniques Restricted, Mari Petroleum, Engro Fertilisers, and Pakistan Petroleum Restricted to make the MSCI FM 100 Index. 

Fortunate Cement has the best weighted constituent (0.46%), whereas Pakistan Petroleum has the bottom weighted constituent (0.22%).

Analysts anticipate international inflows of $75-95 million in May 2022 on account of MSCI’s assessment, “while active flows may materialise prior to May 2022.”

Pakistan is estimated to have a 3.64% weighting in the MSCI FM 100 Index, brokerage Arif Habib Restricted mentioned in a market notice.

MSCI downgraded Pakistan to a frontier market in September, 4 years after it was upgraded to an rising market.

“Although 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,” MSCI had then mentioned.

Nevertheless, the choice elevated Pakistan’s weighting in the MSCI Frontier Markets Index to 2.3%. Moreover, funds elevated their Pakistan holdings to 10% inside a 12 months.

The MSCI Pakistan Index has a weight of 1.28% when in comparison with the opposite three elements of the MSCI Frontier Markets Index.

The MSCI Pakistan Standalone Index additionally stays unchanged, with all 17 shares beforehand added to the Frontier Market Index from the Pakistan Inventory Change (PSX) sustaining their positions.

In keeping with the MSCI assertion, the index has been expanded to incorporate solely LOC Holdings of Sri Lanka. 

The analysts are of the view that this might outcome in new inflows into the nation, which is at present grappling with a ballooning present account deficit on account of a excessive import invoice and quickly depleting international trade reserves. 

“This may result in some/modest foreign inflows. However, local investors will continue to drive the market,” an analyst said.