Addition of 4 more PSX firms likely: MSCI to announce Nov Index review tomorrow

KARACHI: The MSCI is scheduled to announce its November 2024 Index review on November 06, 2024, with effective date of November 26, 2024.

Based on details updated on the MSCI website, in last review of August 2024, the minimum threshold of free float and total market cap for the selection of frontier market stocks was $69 million and $138 million, respectively.

To note, in last two reviews, the MSCI has increased its threshold requirement by average 10 percent in each review.

Any change in this threshold is not known until the results are announced for that particular review and it is generally updated every quarter.

MSCI adds 6 Pakistani companies to Small Cap, 1 to Frontier Markets Indexes

“We have assumed 10 percent increase in threshold requirement from $69 million to $76 million for free float and $152 million for full market cap”, Shankar Talreja, an analyst at Topline Securities said.

“In November 2024, we expect likely addition of 04 stocks namely Fauji Cement (FCCL), Cherat Cement (CHCC), Fauji Fertilizer Bin Qasim (FFBL), and Kohat Cement (KOHC)”, he said.

The free float market cap of these stocks as of October 31, 2024 was $101 million, $106 million, $107 million, and $79 million, three of these are much higher than anticipated free float threshold of $77 million, he added.

There are also two other companies with free float exceeding $69mn (previous criteria), i.e. Pioneer Cement (PIOC) $71.6 million, and Fatima Fertilizer (FATIMA) $72.4 million. “If free float threshold requirement is not enhanced by our assumed 10 percent, the addition of any of these cannot be ruled out”, Shankar Talreja said.

As TRG was retained in last review under the buffer rule, the free float market cap of TRG now improved to $70.7 million. Interloop (ILP) free float is also lower at $63 million.

“We believe, both of the stocks would be retained under the buffer rule”, he said.

Copyright Business Recorder, 2024