KARACHI: MSCI has announced results of its Quarterly Index Review (QIR) on Tuesday and all changes will be effective from August 30, 2024.

The Index provider has added one scrip from Pakistan in its MSCI Frontier Markets Index namely Sazgar Engineering (SAZEW) against market expectations of 4-6 scrips.

MSCI has increased cut-off threshold of total market cap and free float market cap from $126 million and $63 million to $138 million and $69 million, respectively for this August 2024 QIR.

The companies that defy the expectations were Faysal Bank (FABL), Fauji Cement (FCCL), Fauji Fertilizer Bin Qasim (FFBL), and DG Khan Cement (DGKC). These companies had free float market cap of $67.8 million, $63.9 million, $68.6 million and $67.1 million, respectively as of the last cut-off date. As mentioned above the criteria raised to $69 million free float.

Similarly, TRG was retained in index despite not meeting the required market cap threshold.

Small Cap Index: MSCI has added six stocks and removed 2 stocks from its frontier market small cap index. The additions are, Atlas Battery (ATBA), Ghandhara Autombile (GAL), Habib Sugar (HABS), Lotte Chemical (LOTCHEM), Octopus Digital (OCTOPUS), and Soneri Bank (SNBL). The deletions are, SAZEW, and Hascol Petroleum (HASCOL).

To note, SAZEW is now part made of MSCI Frontier Market Index.

Addition of SAZEW is likely to increase weight of Pakistan by 07 bps. Similarly, existing constituents’ weight is also expected to increase from 4.35 percent to 4.49 percent, Shankar Talreja at Topline Securities said and added these both will take total Pakistan weight to 4.56 percent, up 21bps.

“Assuming $5-10 billion AUMs tracking MSCI Frontier Market Indexes, we estimate, gross inflows of $10-21 million,” Shankar Talreja said. “Within this, gross inflows in SAZEW are expected at $3.3-6.6 million.”

Copyright Business Recorder, 2024