Investment research firm MSCI has recently announced updates to its global indices, set to take effect on November 30, 2022, in the Semi-Annual Review (SAIR). As part of these updates, MCB Bank has been removed from the Frontier Markets (FM) Pakistan Index and moved to the MSCI FM Pakistan Small Cap Index. As a result, only two stocks, Lucky Cement (LUCK) and Oil & Gas Development Company (OGDC), remain in the MSCI FM Pakistan Index.
Pakistan’s weight in the MSCI FM Index currently stands at approximately 0.66 percent. According to MSCI’s market classification methodology for November 2022, frontier markets must meet specific market capitalization and free-float market capitalization requirements to be included in the index.
Along with the removal of MCB Bank from the FM Index, MSCI also announced other modifications to the MSCI Small Cap Index, including the addition of various small index stocks such as The Resource Group (TRG), Millat Tractors Limited (MTL), Mari Petroleum (MARI), Engro Fertilizers Limited (EFERT), and others.
It’s worth noting that last year, Pakistan was moved from the Emerging Markets (EM) category to the MSCI FM Index due to changes in market accessibility and size and liquidity requirements. Initially, three Pakistani stocks—HBL, LUCK, and MCB—were added to the main index, but MCB’s recent removal signifies a shift in the market’s composition.
Overall, the market anticipates a neutral review in light of these changes to the MSCI indices.
