NEW YORK: Morgan Stanley Capital International on Wednesday announced the results of its semi-annual review of MSCI Equity Indexes, including MSCI Global Standard Index and MSCI Global Small Cap, as per which its revealed changes in the constituents of its global indices.
From Pakistan’s viewpoint, there were no changes in the MSCI Pakistan Index under the MSCI Global Standard Indexes. All the three large and mid-cap Pakistani stocks i.e. MCB Bank (MCB), Oil and Gas Development Company (OGDC) and Habib Bank Limited (HBL) in its Global Standard Indexes (GSI), according to the review results.
“This was a major sword hanging in front of us. COVID-19 has bought us time. Some investors would have wanted Pakistan to become part of Frontier Markets where it commands a higher weight. However, years of effort would have been undone and politically, it could have scared the government. Nonetheless, better to be a small fish in a bigger pond,” said AAH Soomro, MD at Khadim Ali Shah Bukhari Securities.
The decision would help Pakistan (Pakistan Stock Exchange/PSX) win global stock market investors’ confidence to invest in listed firms at PSX, as they follow MSCI decisions to invest or divest at global markets. These foreign investors have around $2 trillion investment in hand.
Meanwhile, the MSCI added two Pakistani stocks and deleted another two in its Global Small Cap Indexes.
Accordingly, the small cap indexes would welcome Mari Petroleum and Pakistan Petroleum and farewell Nishat Mills and Sui Northern Gas Pipeline Limited.
The changes will take place at close of May 29, 2020, MSCI announced.
The total number of Pakistani constituents in the small cap indexes stands at 16, including Bank Alfalah, Engro Corporation, Engro Fertilisers, Fauji Fertiliser Company, Hub Power Company, Indus Motor, Lucky Cement, Mari Petroleum, Millat Tractors, National Bank of Pakistan, Packages Limited, Pakistan Oilfields Limited, Pakistan Petroleum, Pakistan State Oil, The Searle and United Bank Limited.
Pakistan was reclassified into the MSCI EM Index from the FM Index in May 2017 after a gap of nine years. Earlier, the country was downgraded to FM Index in 2008 after the PSX (previously known as Karachi Stock Exchange) virtually suspended trading for quite a long period to avoid harsh selling.