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Pakistani Stocks risk being downgraded from MSCI Index: Insight Securities

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October 17, 2018 (MLN): After the 17.3% underperformance of MSCI Pakistan Index vs. MSCI EM Index since May, 2018 review, there are risks that more stocks would be downgraded/dropped from the MSCI Pakistan Universe, opined Mr. Zeeshan Afzal, research analyst at Insight Securities, in his research report.

The Morgan Stanley Capital International (MSCI) is scheduled to announce its semi-annual index review on November 13, 2018.

When asked if there are chances that Pakistan might be dropped from MSCI’s Emerging Market (EM) Index, Mr. Afzal told an official spokesperson of Mettis Link News that, “MSCI usually makes a decision after considering the valuation and trading activity for a longer period of time to mitigate the impact of short term market shocks. Although a debate to re-evaluate the market might start.”

In his research note, he wrote that “even the debate of downgrading Pakistan would take time to start and in case May 2019 review meeting agenda includes that prices of last 10 days of April would be the deciding factor, any recovery of 10.2% in HBL and 27% in UBL (in dollars) would meet the criteria by that time.

However, while LUCK is likely to be downgraded to Small Cap Index from EM Standard Index, it is expected that MLCF (on low market cap) and THALL (on low 12 month ATVR) may be excluded from Pakistan Small Cap Index, while HCAR remains on the border line.

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Posted on: 2018-10-17T11:40:00+05:00

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