Karachi, August 11, 2023 – In an unexpected announcement during its Quarterly Index review on August 10, 2023, MSCI made a significant move by adding 15 Pakistani stocks to its MSCI Frontier Market Index, along with the inclusion of 41 stocks into the MSCI Frontier Markets Small Cap Index.
This addition of 15 stocks brings the total number of constituents in the MSCI Frontier Market Index to 17. The newly included stocks in the index are OGDC, MARI, PPL, LUCK, MCB, UBL, ENGRO, HBL, POL, SYS, FFC, HUBC, EFERT, MTL, BAFL, PSO, and TRG. Previously, the index had only two Pakistani stocks, OGDC and ENGRO.
The MSCI Frontier Markets Small Cap Index now has a total of 41 constituents, a significant increase from the 14 stocks that were part of the Frontier Small Cap Index previously.
Analysts from Topline Securities noted that Pakistan now has a total of 58 stocks included in the MSCI Frontier Market index, with 17 stocks in the main index and 42 stocks in the Small Cap Index. This substantial representation highlights growing investor interest in Pakistan’s equities.
Following this rebalancing, analysts project that Pakistan’s weight in the MSCI Frontier Market Index is expected to increase from its previous level of 0.6 percent to approximately 2-3 percent, reflecting the country’s increasing significance in this market.
The changes to the MSCI Frontier Market index, which are a result of the recent review, will take effect on August 31, 2023. It’s worth recalling that Pakistan was reclassified from an Emerging Market to a Frontier Market by MSCI in November 2021.
Foreign participation in Pakistan’s markets has regained momentum. Over the past six weeks, foreign corporations have been net buyers, contributing a total of $27 million to the market.
In terms of foreign exchange (FX) concerns, the Pakistan Central Bank has been efficient in facilitating the remittance of foreign portfolio investment funds, signaling a positive environment for foreign investors looking to participate in Pakistan’s markets.