Pakistan upgraded to MSCI Emerging Markets Index

[Devil Soul]

Pakistan upgraded to MSCI Emerging Markets Index
By Salman Siddiqui / Bilal Memon
Published: May 16, 2017
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KARACHI: After a gap of nine years, the Pakistan Stock Exchange (PSX) has been upgraded to the MSCI Emerging Markets status, opening its door to global investors that track the index with $1.4-1.7 trillion in hand.

MSCI, a leading provider of international investment decision support tools, announced the changes to its indexes as a result of its May 2017 Semi‐Annual Index Review, including upgrading Pakistan as an emerging market from a frontier market status.

Market watch: KSE-100 ends shy of 52,400, gains over 600 points

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“The MSCI Pakistan Indexes will fully converge with the MSCI Provisional Pakistan Indexes, effective June 1, 2017,” said the press release issued early Tuesday morning. “There will be no additions to and ten deletions from the MSCI Pakistan Index. There will be eleven additions to and six deletions from the MSCI Pakistan Small Cap Index.”

As per the decision, six large-cap stocks will now be part of the MSCI Pakistan Index with effect from June 1, 2017.

• Oil and Gas Development Company
• Habib Bank Limited
• United Bank Limited
• Lucky Cement
• MCB Bank
• Engro Corporation

Additionally, 27 small-cap stocks were included into the MSCI Pakistan Index.

• Bank Alfalah
• Engro Fertilizers
• Fauji Cement
• Fauji Fertilizer Bin Qasim
• Fauji Fertilizer Company
• Ferozesons Laboratories
• Honda Atlas
• Hub-Power Company
• IGI Insurance
• Indus Motor Company
• International Steels
• DG Khan Cement
• Kot Addu Power Company
• Maple Leaf Cement
• Millat Tractors
• National Bank of Pakistan
• National Refinery
• Nishat Mills
• Packages
• Pak Elektron
• Pak Suzuki Motor Company
• Pakistan Oilfields
• Pakistan State Oil
• Searle Pakistan
• Shell Pakistan
• Sui Northern Gas Pipelines
• Thal Jute Mills

Many global institutional investors use different MSCI indexes – such as frontier, emerging, China and US markets – to create balanced portfolios to generate maximum returns while keeping in view their overall risk appetite.

Market watch: KSE-100 increases another 965 points

MSCI’s decision to upgrade Pakistan from the Frontier Markets status is also expected to generate inflows of global portfolio investment in the range of $200-500 million, according to JS Global Research.

The euphoria

Excitement over Pakistan’s return to the MSCI EM has helped the KSE-100 increase 8.6% this year alone, with political uncertainty over the Panama case verdict holding back a greater increase. Since the verdict announcement on April 20, the KSE-100 has increased over 10% with most analysts and brokerage houses saying that the bullish run is likely to continue.

In calendar year 2016, Pakistan was the top-performing market in Asia with a 46% return.

Currently, the KSE-100 is positioned at its all-time high of 52,387.87 points despite the fact that foreigners have been net sellers of over half-a-billion dollars since June last year. With the official reclassification, most analysts note, the outflow is likely to reverse.

Pakistan Stock Exchange: MSCI upgrade revives foreign investor interest

Pakistan was part of the MSCI EM Index between 1994 and 2008. However, the temporary closure of the then Karachi Stock Exchange in 2008 led MSCI to remove it from the index and classify it as a “standalone country index”. MSCI then made Pakistan a part of the Frontier Markets Index in May 2009.


Read more: EM index , MSCI , Pakistan emerging market

 

[LA se Karachi]

Great news

 

[Kambojaric]

Brilliant. Foreign investment is always welcome.

 

[Maxpane]

may our country continue progress and be prosperous and peaceful

may our country continue progress and be prosperous and peaceful

may our country continue progress and be prosperous and peaceful

 

[cloud4000]

Great news

Good news indeed. Key for Pakistan to maintain economic momentum and not falter. Pakistan has been included in the index before only to be kicked out later.

 

[Kabira]

Why was Pakistan kicked out last time? Terrorism?

 

[Blacklight]

Pakistan not ready to become emerging market: Mark Mobius

Franklin Templeton Investments will continue to treat Pakistan as a frontier market even after it enters MSCI Inc.’s emerging-market indexes, Mark Mobius said, as he announced the reopening of Templeton’s frontier fund to new investments after four years.

The executive chairman of Templeton Emerging Markets Group said the money manager looks at corporate governance and transparency before considering a nation as an emerging market, while index providers may emphasise market size and volume of stock trading in their upgrade plans.

“We don’t think Pakistan is ready to graduate to an emerging market yet," Mobius said. “If the market cap increases, trading turnover and the number of shares increase, the index people may upgrade. But it can’t be said that companies have really improved their governance or improved their behaviour generally."

Read more at:
http://economictimes.indiatimes.com...ofinterest&utm_medium=text&utm_campaign=cppst

It is not surprising that an indian newspaper has published this.

What is surprising is, that a NORTH KOREAN sitting in Syria is publishing it. At least have the courage to fly your country's flags. Don't be so ashamed of it.

@waz @The Eagle @WAJsal Is it allowed, as per forum rules to fly random flags? and post BS?

 

[LA se Karachi]

Why was Pakistan kicked out last time? Terrorism?

Lol, no.

Pakistan closed the stock exchange in 2008, and as a result, the MSCI removed it from its Emerging Markets Index:

'Pakistan was actually part of the EM Index from 1994 but the Karachi Stock Exchange's temporary closure in 2008 due to a liquidity crunch amid the global financial crisis forced MSCI to drop the country at the end of that year. In 2009, Pakistan was included in MSCI's Frontier Markets Index and the firm warned that the market needed to function without any trading disruptions for some time before being considered for reclassification in its EM Index.

"That's an interesting lesson from Pakistan....You had to have a period of time where investors got comfortable with the idea that they wouldn't close the market again," noted Adrian Mowat, managing director and chief Asian and emerging market equity strategist at J.P. Morgan.'

http://www.cnbc.com/2016/06/15/why-...g-markets-index-approval-and-china-didnt.html


However, in 2016, MSCI announced that Pakistan would be reclassified as a part of the Emerging Markets Index in May 2017.

'French bank Natixis described Pakistan as the “biggest winner of the 2016 MSCI Market Classification Review,” adding that “by acquiring the EM designation, its firms and index in general may get the capital inflows it wouldn’t otherwise get as a FM. In other words, Pakistan has entered a bigger league.'

https://www.ft.com/content/1df1e9fb-d1f8-3dfe-80ac-10d88bc57279

Good news indeed. Key for Pakistan to maintain economic momentum and not falter. Pakistan has been included in the index before only to be kicked out later.

Indeed.

It should be fine, so long as it doesn't make the same mistake it did in 2008. I don't see a global economic recession on the horizon, however, so I doubt that there will be any reason for it to consider such a measure.

 

[cloud4000]

It should be fine, so long as it doesn't make the same mistake it did in 2008. I don't see a global economic recession on the horizon, however, so I doubt that there will be any reason for it to consider such a measure.

It will be hard given massive investments China is making (and will continue to make) in Pakistan. They will not let their investments fail. They will pressure Pakistan government to behave.

 

[LA se Karachi]

It will be hard given massive investments China is making (and will continue to make) in Pakistan. They will not let their investments fail. They will pressure Pakistan government to behave.

Well, that may be true.

However, my point is that Pakistan only closed its stock exchange as a result of the 2008 financial crisis. And since there is no impending global financial crisis, there's no reason for it to close the PSE.

 

[Dil Pakistan]

The ONLY and REAL test of this growth will be to see if these gains are converted to improving the condition of the MASSES....without this, all this growth has no meaning at all.

US and Europe has enjoyed much more, better and sustained growth in the last 50 to 70 years.

Capitalism always leads to concentration of wealth in FEW HANDS .... as a result the gap between rich and poor widens and poverty increases.....this is the classic story of USA.

 

[AZADPAKISTAN2009]

I was intrested in fund but was hoping few other giants were added to mix

• PIA (Aviation Engineering )
  
• Steeles Mills (Steel Production)
  
• Pakistan Railways (Transportation / Logistical company)

Suprised these Giant companies are not in the Fund

• Wanted to see International $$$ getting invested in these companies as well

Pakistan needs to find a way to get these Giant Companies into Index !

 

[LA se Karachi]

https://www.msci.com/documents/10199/4e300cf1-78ba-409a-ba9c-68092c928396