MSCI removes Bank Alfalah, EPCL & Indus Motor from Small Cap Indexes

MSCI Inc, a leading provider of decision support tools and services for the global investment community, in its semi-annual index review announced the deletion of Bank Alfalah (BAFL), Engro Polymer & Chemicals (EPCL), and Indus Motor Company (INDU) from the constituent list of its MSCI Frontier Markets Small Cap Index (FM).

The three companies were added to the MSCI FM Small Cap index in May 2022.

The MSCI announced results of the May 2023 Semi-Annual Index Review for the MSCI Equity Indexes — including the MSCI Global Standard, MSCI Global Small Cap and MSCI Micro Cap Indexes, the MSCI Global Value and Growth Indexes, the MSCI Frontier Markets, and MSCI Frontier Markets Small Cap Indexes, the MSCI Global Islamic Indexes.

According to a note from brokerage house Arif Habib Limited (AHL), Pakistan has an estimated weight of 0.6% in MSCI FM Standard Index.

Only two Pakistani stocks including Engro Corporation and Oil & Gas Development Company (OGDC) have retained their position in the MSCI FM Pakistan Index

After the three deletions, the MSCI FM Small Cap index includes Hub Power Company (HUBC), Systems Limited (SYS), United Bank Limited (UBL), Lucky Cement (LUCK), Fauji Fertilizer Company (FFC), MCB, Engro Fertilizers Limited (EFERT), The Resource Group (TRG), Habib Bank Limited (HBL), Mari Petroleum (MARI), Pakistan Oilfields Limited (POL), Millat Tractors Limited (MTL), Pakistan Petroleum Limited (PPL), and Pakistan State Oil (PSO).

“Pakistan remains the second cheapest market in MSCI FM index in terms of Price-to-Earnings and Price-to-Book multiples,” said AHL. “From a liquidity perspective, Pakistan is the third most liquid market in the MSCI FM universe,” it added.

Back in September 2021, 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.

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.