Karachi, November 7, 2024 – In a strong show of performance, Pakistan’s stock market has risen to prominence as the second most liquid market in the MSCI Frontier Markets (FM) index. This achievement underscores Pakistan’s appeal within the global investment landscape, as the market outperformed the MSCI FM index by an impressive 43.4% in year-to-date 2024, according to Arif Habib Limited’s latest analysis.
The recent MSCI index review, announced ahead of changes set to take effect after market close on November 25, 2024, confirmed adjustments that could further boost the profile of Pakistani equities among global investors. Pakistan now boasts an average daily trading volume (ATV) of USD 66 million, placing it among the most actively traded markets within the MSCI FM category.
Key Changes in MSCI FM Standard Index
Following the index review, the MSCI Frontier Markets Standard Index for Pakistan will include 21 key constituents, reflecting both sectoral diversity and market capitalization breadth. Notably, TRG Pakistan Ltd. (TRG) has been removed from the MSCI FM Standard Pakistan Index, a decision that analysts suggest could shift liquidity within the broader market. The remaining key constituents in the MSCI FM Standard Pakistan Index include United Bank Ltd. (UBL), Fauji Fertilizer Company Ltd. (FFC), Hub Power Company Ltd. (HUBC), Oil & Gas Development Company (OGDC), Engro Fertilizers (EFERT), Lucky Cement (LUCK), and MCB Bank Ltd. (MCB), among others.
These 21 companies collectively solidify Pakistan’s standing with an estimated weight of 4.4% in the FM Standard Index. This allocation is anticipated to drive continued capital inflows into Pakistan’s market, as institutional investors track MSCI indices closely for strategic investment opportunities.
Updates in MSCI Small Cap Index
The MSCI Small Cap Index has also seen noteworthy adjustments. Citi Pharma Ltd. (CPHL), Crescent Steel & Allied Products Ltd. (CSAP), Fast Cables Ltd. (FCL), Flying Cement Company Ltd. (FLYNG), Pakistan Oxygen Ltd. (PAKOXY), Shifa International Hospitals Ltd. (SHFA), Thatta Cement Company Ltd. (THCCL), and TRG Pakistan Ltd. (TRG) have been added to the index. Conversely, Fauji Fertilizer Bin Qasim Ltd. (FFBL) has been excluded from the small-cap category.
This index now includes 399 constituents globally, of which 67—approximately 17%—are based in Pakistan. With a substantial weighting of 10.5% in the MSCI FM Small Cap Index, Pakistani small caps present considerable investment potential within the broader FM space.
These adjustments not only highlight Pakistan’s liquidity and increasing relevance but also reinforce its standing as a pivotal player within emerging and frontier markets, attracting the attention of international investors eyeing high-growth opportunities in FM equities.
