KARACHI: Ten Pakistani leading stocks have been included in the newly launched Frontier Markets 100 Index of Morgan Stanley Capital International (MSCI) Inc.
According to research head of KASB Securities and Economics Research Imtiaz Gadar here Thursday, the index is highly correlated to the broader MSCI Frontier Markets Index, but is composed of just 100 of its largest and most liquid constituents.
The index has been launched keeping in view significant demand from institutions around the world for a more tradable version of MSCI Frontier Markets Index--specially from those who face various obstacles in replicating broader frontier markets indices.
He said that as per initial details of the constituents of the index, there will be 10 Pakistan stocks in the Frontier 100 Index. While detail of the exact weight assigned to Pakistan is not available, we believe it should not be materially different from the 4.4% weight enjoyed by Pakistan in the MSCI FM index.
Gadar said that stocks included Oil and Gas Development Company, MCB Bank, Fauji Fertilizer Ltd, Pakistan Oilfields Ltd, Pakistan Petroleum Ltd, Engro Corporation, National Bank of Pakistan, Hub Power Company, Pakistan State Oil and United Bank Ltd.
He said that the index has just been launched, it will take time before it starts getting traction and the funds tracking the index assume meaningful size.
Positively however, MSCI has highlighted that a leading asset management firm has indicated that it will be using the index for a forthcoming exchange traded fund (ETF).
From Pakistan's vantage point, the benefit could be two fold: 1) flow of passive funds due to decent representation and 2) increased visibility for investors.
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