The Morgan Stanley Capital International (MSCI) announced its Semi Annual Review (SAIR) outcome earlier this week, whereby Pakistan now has a weight of 0.023% compared to 0.016% previously. Additionally, Pakistan’s weight in the small-cap index has been revised to 0.379%. Pertinently, said changes would become effective from May 28, ’21.

MSCI added LUCK and deleted OGDC from MSCI EM Standard Index.

We estimate inflows in the LUCK to the tune of USD 39.65mn (6.89mn shares at last closing price), while we estimate outflows in OGDC to clock in at USD 16.69mn (27.48mn shares at last closing).

Moreover, four deletions and one addition from the MSCI small index as INDU, LUCK, NBP and PKGS have been removed, and TRG has been added.

On the small-cap flows, we believe that funds invested in LUCK under small-cap might not offload LUCK while other estimated outflows are NBP (USD 3.78mn; 17.56mn shares), INDU (USD 4.0mn; 0.55mn shares) and PKGS (USD 3.46mn; 1.09mn shares). On the inflow side, USD 17.46mn inflow is expected in TRG (16.08mn shares at last closing).

Total USD 29.18mn net inflow expected (USD 22.96mn net inflow from the standard index and USD 6.22mn net inflow from small-cap) assuming small-cap tracking funds won’t be selling LUCK while taking selling in LUCK from small-cap net inflow will still be USD 3.36mn (USD 22.96mn net inflow from the standard index and net selling of USD 19.60mn from the small-cap index.

Courtesy – AHL Research