Pak to remain in MSCI EM, 2 additions and 2 deletions in Small caps

KARACHI: The Morgan Stanley Capital International (MSCI) announced outcome of its Semi Annual Review (SAIR) yesterday, whereby Pakistan now has a weight of 0.026 per cent. Additionally, Pakistan’s weight in the small cap index has been revised to 0.734 per cent.

All three companies including OGDC, MCB and HBL have maintained their position in the MSCI Standard Index as the buffer rule (33% or 2/3) has most probably been applied and relaxation given in the total float category for HBL, and for OGDC and HBL in the free float market cap.

Moreover, there have been two deletions and two additions from the MSCI small index as NML and SNGP have been removed and MARI and PPL have been added.

Pertinently, said changes will become effective from 1st Jun’20. The outflows resulting from deletion of NML and SNGP are expected to be negligible.

Post review, the MSCI small cap index scrips include: ENGRO, LUCK, FFC, HUBC, PPL, UBL, POL, EFERT, PSO, MARI, BAFL, SEARL, MTL, NBP, INDU and PKGS.

Overall, the review is expected to be neutral for the market. However, HBL might perform given its underperformance prior to the review as threat of exit from the index has been avoided.

The minimum criteria for EMs has been reduced to $1,400 million total market cap (previously: $1,532mn) and $700 million float market cap (previously: $766mn).

The Index Continuity Rule remains for Pakistan (since May-2019), with Czech Republic, Egypt, and Peru added to the list.

MSCI states that such indexes may be discontinued if there are no constituents left in accordance with the MSCI GIMI methodology.

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