MSCI likely to add 4 new Pakistani stocks to its indices

August 01, 2024 (MLN): Morgan Stanley Capital International (MSCI) is likely to add DG Khan Cement (DGKC), Sazgar Engineering (SAZEW), Faysal Bank (FABL), and Fauji Fertilizer Bin Qasim (FFBL) to its Frontier Market Index, according to a report by Topline Securities.

The mentioned companies will be eligible to join the index as their free float and market capitalization are both above the threshold used in the last review by 6-27%.

Accordingly, with the addition of these companies and an increase in the market cap of existing constituents by 9%, Pakistan's weight is likely to increase to 4.7- 4.8% from 4.2-4.3%.

The brokerage house also mentioned that there is a possibility of adding Fauji Cement (FCCL) to the index. However, its free float is only 1.4% above the threshold from the last review.

On the other side, TRG fails to meet the total market cap requirement of $126m as its market cap in last 10 working days has ranged between $105- 117m. However, with the help of the buffer rule, this company may also remain part of the index.

Any upward revision in free float or total market threshold by MSCI may result in deviation in our above estimates, it said.

Based on details updated on the MSCI website, in the last review of May 2024, the minimum threshold of free float and total market cap for the selection of frontier market stocks was revised upward from $57m to US$63m and $114mn to $126mn, respectively.

Moreover, any change in threshold is not known until the results are announced for that particular review and it is generally updated every quarter.

It is worth mentioning that MSCI is scheduled to announce its Quarterly Index Review (QIR) on August 12, 2024 and any changes in the index will be effective from September 02, 2024.

Pakistan currently has 21 stocks in the MSCI Frontier Market (FM) Index.

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