MSCI: Pakistan’s weight in FM-100 expected at 4.05%, no change in Main Index likely

May 10, 2022 (MLN): The Morgan Stanley Capital International (MSCI) is slated to announce its Semi-Annual Review (SAIR) on 12^th May 2022, wherein no change is expected in Pakistan’s MSCI Main Index.

Despite all top three constituents not fulfilling the total market cap requirement of USD 1,189mn, there would be no change given the applicability of the buffer rule with LUCK, HBL and MCB accumulatively rendering Pakistan’s weight to arrive at 1.07%, Tahir Abbas, Head of Research at Arif Habib Limited in his research note said.

In addition, MARI will not be part of the MSCI Pakistan index with a low FIF factor as the main culprit, despite fulfilling the total and free-float market cap requirement. In addition, MEBL, which was not part of the MSCI Pakistan Investable Market Index (IMI) as of Apr’22 (same case as OGDC), cannot be part of the MSCI Pakistan index, he added.

MSCI will also unveil the constituents for the MSCI FM 100, where a total of 13 constituents from Pakistan are expected to be added. These companies include ENGRO, LUCK, HUBC, UBL, HBL, MCB, FFC, SYS, EFERT, MARI, MTL, PPL and POL with a cumulative weight of 4.05% in the index.

The highest weighted constituent will be ENGRO (weightage of 0.43%) while the lowest weighted company will be POL (weight: 0.20%), the report underlined.

To recall, Pakistan was added to MSCI FM100 and MSCI FM 15% country cap index with changes applicable from May’22 SAIR.

The eligibility criteria for inclusion in MSCI FM 100 index for any security requires that it must not be subject to a limited investability factor, have above 10% annualized traded value ratio (ATVR) for the last 12-months, and has started trading at least 2 months prior to the index review.

Meanwhile, it is pertinent to note that, said changes will become effective from June 1^st 2022.

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