In a positive development, Morgan Stanley Capital International (MSCI) Inc in its results of the August 2023 index review announced the addition of a record 56 Pakistani companies as constituents on its Frontier Market (FM) Index and FM Small Cap Indexes.
The changes will take place as of the close of August 31, 2023, it said.
MSCI added 15 Pakistani companies on its Frontier Market Index. The list features Bank Alfalah, Engro Fertilizers, Fauji Fertilizer Co, Habib Bank, Hub-Power Co, Lucky Cement, Mari Petroleum, MCB Bank, Millat Tractors, Pakistan Oilfields, Pakistan Petroleum Limited, Pakistan State Oil Co, Systems, TRG Pakistan, and United Bank.
In the MSCI FM Small Cap indexes, 41 Pakistani companies have been added, stated MSCI in the note.
This includes, Air Link Communication, Attock Cement Pakistan, Attock Refinery, Avanceon, Bank Of Punjab, BankIslami Pak, Cherat Cement, Cnergyico Pk, Engro Powergen Qadirpur, Fauji Cement Co, Fauji Fertilizer Bin Qas, Faysal Bank, Gul Ahmed Textile Mills, Honda Atlas, Hum Network, International Ind International Steels, Jahangir Siddiqui & Co, Khan (DG) Cement Co, Kohat Cement, Kot Addu Power Company, Lalpir Power, Maple Leaf Cement, Mughal Iron & Steel Ind, National Foods, National Refinery, Netsol Technologies (PK), Nishat Chunian Power, Nishat Mills, Nishat Power, Pak Aluminium Bev Cans, Pak Elektron, Pakistan Intl Bulk, Pakistan Refinery, Pioneer Cement, Searle Pakistan, Shell Pakistan, Sui North Gas Pipelines, Tariq Glass Industries, TPL Properties, and Unity Foods.
Experts suggested this should increase Pakistan’s weight from 0.68% to around 2.7%.
“Among all the countries, Pakistan has experienced the most significant increase in weight in the FM Standard Index i.e. +2.1%,” said Arif Habib Limited (AHL) in a report.
“In contrast, heavyweight countries like Morocco, Romania, and Kazakhstan have witnessed a decline of 1.2%, 1.0%, and 1.1%, respectively,” it said.
The brokerage house expects the MSCI review to have a positive impact on the market.
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.