The following months MSCI Pakistan Index operated on a stand-alone basis; and included in the MSCI FM Index in May 2009. With the new reclassification coming into effect, Pakistan will have a weight of 0.15 percent compared to 9.1 percent in MSCI FM. Pakistan's succession into EM will be more favourable given funds tracking EM are $1.2-1.5 trillion.
Six companies have been shortlisted by the MSCI committee for inclusion in the MSCI EM Index. These include OGDC, HBL, UBL, MCB, LUCK, and ENGRO. Apart from this, 27 other companies have also been shortlisted to make the cut for MSCI Pak small-cap Index. These include BAFL, EFERT, FCCL, FFBL, FFC, FEROZ, HCAR, HUBC, IGIIL, INDU, ISL, DGKC, KAPCO, MLCF, MTL, NBP, NRL, NML, PKGS, PAEL, PSMC, POL, PSO, SEARL, SHEL, SNGP and THALL.
Since the announcement of Pakistan migrating into MSCI EM (Jun 2016), Pak equities have observed a stunning return of 35.6 percent during the period. Contribution of local investors has not gone unnoticed, especially with outflows witnessed on the foreign front to the tune of $547 million. "However, given Pakistan is now officially a part of EM, we should see impressive inflows further lifting investor sentiments and corroborating the equity market to outperform other asset classes," an analyst at Arif Habib Limited said. Currently, Pakistan is trading at a 30 percent and 29 percent discount to EM Index and regional peers.
Copyright Business Recorder, 2017