Pakistan Upgraded to MSCI Emerging Markets Index

Morgan Stanley Capital Investment (MSCI), a tool provider for different investors across the world in their semi-annual review has upgraded Pakistan to the Emerging Markets from her former Frontier Markets status. Pakistan was a part of MSCI index from 1994-2008, but was erased from the list after the 2008 crises.

The index is known to be extremely stringent in their vetting process, which is why the last upgrade to the Emerging Markets index happened back in 2014 when Qatar and the UAE were added to the index.

In the wake of these announcements, historically many market participants’ expect to see a rise in trading volumes and flows to the country. These usually are a result of the larger pool of investors looking to gain access to the market following the reclassification.

Last year’s MSCI reclassification announced to include Pakistan and Argentina into the MSCI index. This has resulted in a demonstration of positive results from both the markets; Pakistan after the announcement has had a trade volume growth by 273%. Whereas, Argentina following the announcement has had a trading volume growth of 386%. Ever since the announcement, both the markets have outperformed the MSCI Emerging Market Index.

The MSCI Pakistan Indexes will assimilate with the MSCI Provisional Pakistan Indexes form 1^st of June. The announcement also included the list of six large cap companies to be a part of the MSCI Pakistan Index from June 1,

• Oil and Gas Development Company
• Habib Bank Limited
• United Bank Limited
• Lucky Cement
• MCB Bank
• Engro Corporation

Additionally, 27 small-cap stocks were included into the MSCI Pakistan Index.

• Bank Alfalah
• Engro Fertilizers
• Fauji Cement
• Fauji Fertilizer Bin Qasim
• Fauji Fertilizer Company
• Ferozesons Laboratories
• Honda Atlas
• Hub-Power Company
• IGI Insurance
• Indus Motor Company
• International Steels
• DG Khan Cement
• Kot Addu Power Company
• Maple Leaf Cement
• Millat Tractors
• National Bank of Pakistan
• National Refinery
• Nishat Mills
• Packages
• Pak Elektron
• Pak Suzuki Motor Company
• Pakistan Oilfields
• Pakistan State Oil
• Searle Pakistan
• Shell Pakistan
• Sui Northern Gas Pipelines
• Thal Jute Mills

The press release on Tuesday morning stated that “There will be no additions to and ten deletions from the MSCI Pakistan Index. There will be eleven additions to and six deletions from the MSCI Pakistan Small Cap Index.”

Many investors across the world use different indices to make investment decisions to generate maximum profits and decrease risks. MSCI upgrading is expected to help Pakistan generate cash flows in portfolio investment in the 200-500 brackets.