MSCI adds Pakistani firms to key index

KARACHI: Morgan Stanley Capital International’s (MSCI) quarterly index review has brought good news for Pakistan’s stock market.

According to Business Recorder, the review included 15 Pakistan stocks in the MSCI Frontier Market Index and a notable 41 stocks in the MSCI Frontier Markets Small Cap Index.

This move has significantly expanded the MSCI FM Index, now comprising 17 constituents, compared to the previous count of just two stocks, OGDC and ENGRO. The list of stocks now features major players such as OGDC, MARI, PPL, LUCK, MCB, UBL, ENGRO, HBL, POL, SYS, FFC, HUBC, EFERT, MTL, BAFL, PSO, and TRG.

Yesterday, Pakistan Stock Exchange witnessed an initial surge of over 1000 points following the quarterly review.

See: PSX gains 616 points to close at 48,424.40 points

The MSCI Frontier Market Small Cap Index has also seen an impressive growth, now comprising a total of 41 constituents, up from the previous 14.

With these additions, Pakistan’s presence in the MSCI FM index has surged, totaling 58 stocks, with 17 in the MSCI FM Index and 42 in the MSCI FM Small Cap Index.

After Pakistan’s reclassification into the MSCI Frontier Market from Emerging Market in 2021, foreign interest in the country’s stock market has seen a revival. Foreign corporates have made net purchases of $27 million in the past six weeks.

Despite foreign exchange challenges, the Pakistan Central Bank has managed foreign portfolio investment funds smoothly. Analysts anticipate a substantial rise in Pakistan’s weight within the MSCI FM Index, projecting a new weight of 2.7 percent from the current 0.6 percent, starting from September 2023.

See: Pakistan’s foreign exchange reserves decrease by $32 million

Notably, the collective market capitalization of stocks added to the MSCI Pakistan FM Index has surged by 15 per cent since the last MSCI review in June 2023. Adjustments to the MSCI Pakistan Small Cap Index have also seen a surge, with 41 stocks and a 19 per cent growth in market capitalization since the same review.

Pakistan’s FM Standard Index weight has experienced the most significant increase among all countries, adding a positive note to the market outlook.