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  • MSCI Adds National Bank of Pakistan to Frontier Market Index

    MSCI Adds National Bank of Pakistan to Frontier Market Index

    In a significant development for Pakistan’s financial market, MSCI has announced the inclusion of National Bank of Pakistan (NBP) in its Frontier Market Index during the May 2024 index review.

    The addition of NBP marks a notable milestone for Pakistan’s banking sector and underscores the country’s growing prominence in frontier market indices. According to Mohammad Sohail, CEO of Topline Securities Limited, the inclusion of NBP, along with an increase in the free float market capitalization of existing 20 constituents by approximately 12%, is expected to boost Pakistan’s weight in the Frontier Market Index by 30-40 basis points, reaching 4.0-4.3%.

    Furthermore, Pakistan’s weight in the MSCI Small Cap Index is also anticipated to rise, despite no additional scrips being added to the index. This increase is attributed to the impressive performance of existing 56 constituents, which have delivered a remarkable 16% return in USD terms since the last review in February 2024, compared to a 5% decline in the MSCI Frontier Market Small Cap Index. The estimated increase in Pakistan’s weight in the Small Cap Index is projected to be in the range of 50-60 basis points, reaching 3.4-3.5%.

    Analysts estimate that the changes in the overall weight and the addition of NBP to the Frontier Market Index could lead to gross inflows of approximately US$30-40 million. This projection is based on an assessment of assets under management (AUMs) benchmarked to the MSCI Frontier Market Index, which currently stand at around US$10 billion, with a free float of US$119 billion.

    Foreign investment activity in Pakistan’s equity market has been notable in recent weeks. Since May 2, 2024, foreign corporates have already purchased shares worth US$34.4 million and sold shares worth US$20.7 million. This buying pattern suggests a growing interest among foreign investors in Pakistani equities.

    Looking ahead, it is anticipated that Pakistan will continue to attract foreign investment leading up to the implementation date of the index changes, scheduled for June 3, 2024. The partial influx of funds observed in recent weeks indicates that the market has already begun to factor in the anticipated inflows resulting from the MSCI index adjustments.

    Overall, the inclusion of NBP in the MSCI Frontier Market Index reflects positively on Pakistan’s financial market and underscores its attractiveness to international investors. As Pakistan’s market weight increases in key indices, stakeholders remain optimistic about the country’s economic prospects and its ability to attract foreign investment in the long term.

  • MSCI Review Maintains Status Quo for Pakistan Main Index

    MSCI Review Maintains Status Quo for Pakistan Main Index

    November 15, 2023 – In its latest update on the November 2023 Index Review, MSCI has announced that there will be no changes in the constituents for Pakistan in the main Frontier Market Index.

    (more…)
  • PSX changes market timings amid MSCI reclassification

    PSX changes market timings amid MSCI reclassification

    KARACHI: Pakistan Stock Exchange (PSX) on Thursday announced a temporary change in duration for closing price determination and market timings.

    The PSX said that in the context of the reclassification of Pakistan from MSCI Emerging Market Index to MSCI Frontier Market Index, all Market Participants are hereby informed that the following temporary changes in ‘Market Timings’ and ‘Closing Price Determination’ shall be implemented for the period mentioned hereunder:

    1. CHANGE IN DURATION FOR CLOSING PRICE DETERMINATION:

    The ‘Closing Price’ of Securities shall be determined over the last 120 minutes of the regular market session on the basis of Volume Weighted Average Price (VWAP) as against the current practice of last 30 minutes.

    2. CHANGE IN MARKET TIMINGS:

     Revised timing for Post Close Session, Trade Rectification/Modification session and Negotiated Deals Market shall be as under:

    Market State:

    Monday to Thursday

    Post Close Session: 16:00 to 16:30

    Trade Rectification / Modification: 16:30 to 18:15

    Negotiated Deals Market (NDM): 09:15 to 18:15

    Friday

    Post Close Session: First session – Second Session 17:00 to 17:30

    Trade Rectification / Modification: first Session – Second Session 17:30 to 18:45

    Negotiated Deals Market (NDM): First Session 09:15 to 12:00 Second Session 14:30 to 18:45

     The above changes shall remain effective from Friday, November 26th 2021 till Friday, December 3rd 2021. The timings shall be reverted back to the existing DTS w.e.f. Monday, December 6th 2021, the PSX said.

    KSE-100 index sheds 585 points on mini-budget reports
  • Stocks sink 599 points on MSCI announcement

    Stocks sink 599 points on MSCI announcement

    KARACHI: The stocks fell by 599 points on Friday owing to announcement of semi-annual index review for the MSCI equity indexes.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) ended at 45,749 pints as compared with previous day’s close of 46,348 points.

    MSCI has announced the results of the November 2021 Semi-Annual Index Review for the MSCI Equity Indexes. As previously announced, the MSCI Pakistan Indexes will be reclassified from Emerging Markets to Frontier Markets in one step coinciding with this Index Review, effective from December 1, 2021. Pakistan’s in MSCI Frontier Markets will have a weight of 1.25 per cent compared to earlier simulated weight of 1.9 per cent.

    Analysts at Topline Securities said that the KSE-100 index extended its decline to close at 45,749 level, this decline in market can be attributed to MSCI announcement, where it notified Pakistan weight in MSCI Frontier Markets will have a weight of 1.25 per cent compared to earlier simulated weight of 1.9 per cent and three Pakistani securities will be added to the MSCI Frontier Markets Index (LUCK, HBL, MCB) compared to earlier simulated four constituents where OGDC was the fourth constituent.

    TRG, LUCK, OGDC, ENGRO and SYS lost value to weigh down on the index by 186 points.

    Traded volume and value for the day stood 192 million shares and Rs.7.66 billion, respectively.

    UNITY was today`s volume leader with 14.89 million shares.

    KSE-100 index sheds 282 points on PKR depreciation
  • PSX worst performing market in third quarter

    PSX worst performing market in third quarter

    KARACHI: Pakistan Stock Exchange (PSX) is one of the worst-performing markets in the third quarter of 2021, according to analysts.

    Pakistan was one of the worst-performing markets in 3Q2021 (as per Bloomberg). Brazil (-19 per cent) and Hong Kong (-15 per cent) were the only other markets that performed poorly than Pakistan.

    The leading markets were Zambia (+46 per cent) and Mongolia (+28 per cent). These are total returns in USD terms. MSCI EM was also down 9 per cent while MSCI FM increased by 2 per cent during 3Q2021. MSCI Pakistan recorded a decline of 19 per cent.

    The analysts at Topline Securities on Friday said that Pakistan’s benchmark KSE-100 index has registered a decline of 5 per cent in Pak Rupee (PKR) terms and 12 per cent in USD terms in the third quarter of 2021, after delivering consecutive gains during the preceding five quarters (average/quarter: 10 per cent in PKR terms and 12 per cent in USD terms).

    Almost all the losses during the quarter were witnessed in the last two weeks, where the KSE-100 dropped 2,371 points (-5 per cent) in last 13 trading sessions.

    It brings down KSE-100’s recovery from its low on March 25, 2020 to 65 per cent and gains in 2021 year to date to 3 per cent. KSE-100 is now 15 per cent from its peak seen in 2017 in PKR terms, however, market capitalization is down 54 per cent in US$ terms (from US$99.6 billion to US$45.7 billion).

    Concerns at the local bourse stemmed from higher-than-expected Current Account Deficit due to increasing domestic demand and rising international commodity prices. This is also reflected in PKR/USD parity, which deteriorated by 8 per cent in 3Q2021.

    In response, the Central Bank increased the Policy Rate by 0.25 per cent to 7.25 per cent and also have taken host of other measures to curb domestic demand. The federal government has spoken about increasing tariffs to slowdown the demand growth.

    During the quarter, MSCI also decided to downgrade Pakistan from Emerging Market (EM) to Frontier Market (FM).

    Weekly Review: stock market likely to move positively
  • MSCI to reclassify Pakistan Indexes to frontier market

    MSCI to reclassify Pakistan Indexes to frontier market

    New York: MSCI Inc. (NYSE: MSCI) announced on Tuesday that it will reclassify the MSCI Pakistan Indexes from Emerging Markets to Frontier Markets.

    The MSCI is a leading provider of critical decision support tools and services for the global investment community.

    According to a statement, this conclusion follows feedback received from market participants from its recent Consultation on a Market Reclassification Proposal for the MSCI Pakistan Index.

    MSCI will reclassify the MSCI Pakistan Indexes from Emerging Markets to Frontier Markets in one step, coinciding with the November 2021 Semi-Annual Index Review (SAIR).

    Based on a simulation using pro forma data as of August 31, 2021, this would lead to the inclusion of four securities in the MSCI Frontier Markets Index with an estimated index weight of 1.90 per cent.

    Although 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.

    More specifically, index continuity rules, as described in section 2.4 of the MSCI Global Investable Market Indexes Methodology, have been applied since the November 2018 Semi-Annual Index Review to maintain the required three constituents in the MSCI Pakistan Index.

    Since the November 2019 SAIR, there have been no securities in the MSCI Pakistan equity universe that meet the Emerging Markets Size and Liquidity criteria within the MSCI Market Classification Framework.

    Starting with the November 2021 SAIR, the MSCI Pakistan Indexes will be rebalanced using Size and Liquidity requirements for Smaller, Average Liquidity Frontier Markets as described in section 5.2 of the MSCI Global Investable Market Indexes Methodology.

    Shares come down on MSCI reclassification