KARACHI: Morgan Stanley Capital International (MSCI) has announced the much anticipated result of its May 2019 Semi-Annual Index Review for the MSCI Equity Indexes. All 3 constituents of Pakistan (HBL, OGDC, MCB) managed to secure the status of the Standard Index, despite falling short of meeting the size requirement of the Emerging Market (EM) index outlined by MSCI.
‘Buffer Rule’ most likely saved the day for Pakistan whose weight in MSCI EM Index is now estimated at 0.03%, down 7-8bps since its inclusion in June 2017.
“Though it was widely speculated at one point in time that Pakistan would be removed from the MSCI Emerging Market (EM) Index in this review, we were of the opinion that it would be highly unlikely given some cushion available to existing constituents as well as the process of public consultation before announcing to downgrade a country,” Muhammad Sohail at Topline Securities said.
However, some Small Cap stocks in Pakistan’s Investable Market Index were not so lucky as MSCI removed Fauji Cement (FCCL), Fauji Fertilizer Bin Qasim (FFBL) and International Steels (ISL) from the index, leaving the Universe with a total of 22 stocks now, including the Standard 3 securities (HBL, OGDC, MCB).