MSCI August 2025 index review; one Pakistan company added to frontier index

ISLAMABAD: MSCI has announced its August 2025 index review, in which a new Pakistan stock, Faysal Bank (FABL), has been added to the frontier market index.

This takes the total number of constituents in the MSCI Frontier Index to 27, up from 26 previously. These changes will be implemented as of the close of August 26, 2025, Topline Securities stated in a report on Friday.

Based on details updated on the MSCI website, in the August 2025 review, the minimum threshold of free float and total market capitalisation for the selection of frontier market stocks was $90 million and $181 million, respectively. This threshold is significantly higher, by around 15 to 17 percent, than the May 2025 review and is largely in line with the performance of the frontier markets.

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Since the last review of MSCI, the Pakistan market has outperformed the benchmark frontier index, delivering a total USD return of 24 percent in May, June, and July 2025 (three months), compared to a 20.4 percent return for the MSCI Frontier Markets Index.

Among the existing constituents, three scrips have been retained despite not meeting the free float criteria for the second consecutive review, namely ILP ($78 million), ABOTT ($81 million), and SEARL ($86 million). Topline Securities said it believes these stocks have been retained under the buffer rule.

The brokerage noted that in the past, TRG was retained despite not meeting the threshold but was subsequently removed from the index in later reviews.

Pakistan’s weight seen at 6–6.5% after FABL inclusion

Pakistan weight at 6-6.5 percent: Topline estimates Pakistan’s weight in the MSCI Frontier Market Index to be around 6 to 6.5 percent, with FABL adding 8 basis points to the total index.

Inflow estimation in new additions: The addition of a new company accounts for a weight of 8 basis points. Assuming $2–3 billion of funds track the frontier market index globally, the inflows into these companies are estimated at around $1.5–2.3 million. Given that Pakistan is currently not part of any passive fund manager, activity in MSCI-based scrips may remain muted.

MSCI Small Cap: MSCI has also added two stocks to the small-cap index, namely Indus Dyeing (IDYM) and Jubilee General (JGICL), while two stocks have been deleted, Habib Sugar (HABSM) and Octopus (OCTOPUS).

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