MSCI Preview: Pakistan’s chances of being downgraded pretty low despite poor performance

June 22, 2020 (MLN): MSCI is slated to announce the results of the MSCI 2020 Annual Market Classification Review on June 24, 2020, as per Pakistan Standard Time.

Rather than focusing on any addition or deletion this time around, MSCI will be mainly looking at the status of different markets across the board, a research report by Topline Securities informed.

It is pertinent to note that the minimum criteria for the members of Emerging Market have been reduced to $700 million in terms of floating market capitalization, and $1,400 million in terms of total market capitalization.  

Unfortunately, all three constituents from Pakistan, i.e. HBL, MCB and OGDC have been unsuccessful in meeting the criteria for free-float capitalization, whereas OGDC is the only company that has managed to cross the criteria of total market capitalization.

However, the chances of Pakistan being downgraded are pretty low, as MSCI would be taking into account the impact of COVID-19 on the operations of these companies in specific and the economy at general, and would most likely keep the country under Index Continuity Rule.

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