MSCI Semi-Annual Index Review: Pakistan’s weight is expected to increase

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MSCI is scheduled to release its results of the May 2024 Semi-Annual Index Review today (i.e. May 14, 2024). Announcement is expected to be made available shortly after 11 p.m. Central European Summer Time (CEST), i.e. 2 AM. Pakistan Standard Time (PST) on May 15, 2024.

All changes will be implemented as of Jun 03, 2024.

Currently, main Frontier Market Index comprises of 20 constituents, including OGDC, MARI, PPL, LUCK, MCB, UBL, ENGRO, HBL, POL, SYS, FFC, HUBC, EFERT, MTL, BAFL, PSO, TRG, BAHL, ILP and SNGP.

Based on the market cap and free float minimum requirement of US$114mn and US$57mn, respectively, there is a likelihood 3 companies will be added to frontier market index, namely FCCL, ATRL, and NBP.

It is important to highlight that, for May review, price cut-off of MSCI is “any day data of the last 10 business days of Apr 2024”.

Due to this price cut-off methodology, we are uncertain about the addition of CHCC and DGKC as during these cut-off days (Apr 17-30, 2024), there total market cap fell below required US$114mn in few days, however, there average market during these days remained above threshold. Hence there inclusion also can not be ruled out.

While, INDU and MLCF also met the criteria last time in Feb 2024 review and again falling in criteria this time, however, last time these were not added to frontier market index. To highlight, MSCI considers various factors i.e. market liquidity, market accessibility etc. before deciding for inclusion of any security.

We believe, with likely additions of these along with the KSE 100 performance since Jan 31, 2024 (+20% USD terms) from Feb 01 to Apr 30 vs. flattish performance of MSCI frontier index, the overall weight of the Pakistan will be increased and will help in getting some foreign inflows.

Courtesy – Topline Research

 

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