Pakistan eligible for MSCI Frontier Markets 100 Index

Morgan Stanley Capital International (MSCI) announced that Pakistan will become eligible for inclusion in MSCI Frontier Markets (FM) 100 Index as part of the May 2022 Semi-Annual Index Review (SAIR).

The MSCI announcement comes after the conclusion from its consultation on the eligibility of the MSCI Pakistan Index for the MSCI Frontier Markets 100 and MSCI Frontier Markets 15% Country Capped Indexes.

“Following feedback received from 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),” stated MSCI in its announcement.

Reclassification: MSCI adds three Pakistani securities to Frontier Markets Index

MSCI included the MSCI Pakistan Index in the MSCI Frontier Markets Index in one step coinciding with the November 2021 SAIR.

Last year, in September, 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.

Back to the 'smaller pond': MSCI to downgrade Pakistan to Frontier Market

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.

It may be mentioned that Pakistan’s weight in MSCI FM Index is ~1.22%.

Meanwhile, the latest development could attract some much-needed inflows, as Pakistan continues to struggle to attract foreign exchange reserves to meet its current account needs on account of high import bill.

“This can attract some/limited foreign inflows. However, the market would continue to be driven by local investors,” said Fahad Rauf, Head of Research at Ismail Iqbal Securities Limited in a note.

Meanwhile, all three stocks including LUCK, MCB and HBL will retain their position in MSCI Pakistan index.