MSCI Frontier Market Index: No major change in constituents for Pakistan

KARACHI: The MSCI released an update on its November 2023 Index Review, notifying that there is no change in constituents for Pakistan in the MSCI main Frontier Market Index. However, in the Small-Cap Index, four constituents have been removed and four new constituents have been added.

The changes to MSCI Frontier Market index will be effective from November 30, 2023.

The main Frontier Market Index comprises of 17 constituents, including OGDC, PPL, MARI, UBL, LUCK, MCB, ENGRO, HBL, HUBC, FFC, SYS, EFERT, POL, MTL, PSO, BAFL, and TRG.

MSCI adds 41 PSX companies to Small Cap, 15 to Frontier Markets Indexes

In the Small-Cap Index, AGHA, AGP, PSMC, and SAZEW have been added, while FABL, KOHC, MLCF, and SHELL have been removed. The total number of constituents in the Small-Cap Index remains the same at 41.

After this November 2023 Index Review, Pakistan’s weight in the Index reduced from 3.2 percent to 2.9 percent. As per the available information, weight of few other countries including Vietnam, Romania and Sri Lanka have been increase in a range of 0.17 percent to 1.81 percent.

“Due to this adjustment, we expect net outflows but the quantum will be very small,” an analyst at Topline Securities said.

To highlight, Pakistan was reclassified to MSCI Frontier Market from Emerging Market in November 2021 as it did not meet the standards for size and liquidity.

An analyst at Arif Habib Limited said that Pakistan weight in MSCI FM Standard Index is expected to be around 3.0 percent.

The KSE-100 index outperformed all MSCI frontier markets and MSCI FM index during FY24 to date.

“Overall, this review is anticipated to have a neutral impact on the market,” the analyst added.

Copyright Business Recorder, 2023