Pakistan’s weight likely to increase to 4.7-4.8pc

RECORDER REPORT

KARACHI: MSCI is scheduled to announce its Quarterly Index Review (QIR) on August 12, 2024 and any changes in index will be effective from September 02, 2024.

Based on details updated on the MSCI website, in last review of May 2024, the minimum threshold of free float and total market cap for the selection of frontier market stocks was revised upward from $57 million to $63 million and $114 million to $126 million, respectively.

Any change in threshold is not known until the results are announced for that particular review and it is generally updated every quarter.

“In August 2024, we expect addition of D.G. Khan Cement (DGKC), Sazgar Engineering (SAZEW), Faysal Bank (FABL), and Fauji Fertilizer Bin Qasim (FFBL) as their free float and market cap both are above the threshold used for last review by 6-27 percent,” Shankar Talreja, an analyst at Topline Securities said.

There are also chances for the addition of Fauji Cement (FCCL). However, its free float is only1.4 percent above the last review threshold.

“Any upward revision in free float or total market threshold by MSCI may result in deviation in our above estimates.”

He said TRG failed to meet total market cap requirement of $126 million as its market cap in last 10 working days has ranged between $105-117 million. However, with the help of buffer rule, this company may also remain part of the index.

He said Pakistan weight is likely to increase to 4.7-4.8 percent from 4.2-4.3 percent after likely addition of above scrips and increase in market cap of existing constituents by 9 percent.

“Theoretically, due to increase in weight by 35-45bps and assuming AUM size of $5-10 billion tracking MSCI FM index, we expect gross inflows of $2045 million,” he added.