§  Pakistan’s equity market has recorded a decrease of 2.2% or 1,002pts (USD based return of +0.67%) since the last MSCI semiannual review back in Feb’21.

§  At present, Pakistan has a weight of 0.016% in MSCI EM.

What to expect May’21 SAIR

§  As per MSCI Global Index Methodology Apr’21, the criteria for Emerging Markets includes full market capitalization at USD 1,830mn while free float market capitalization of USD 915mn along with ATVR of 15% is required.

§  Assuming cut-off date of April 28, 2021 for the semiannual review, only OGDC fulfills the total market capitalization criteria, while HBL and MCB are short by USD 650mn and USD 562mn, respectively. Whereas on the basis of free float market cap, none of the constituents meet the required criteria of USD 915mn.

§  However, given applicability of buffer rule (2/3 of benchmark criteria), on total market capitalization, OGDC and MCB are eligible while HBL is still short by USD 40mn. Moreover, for free float market cap, all three stocks aren’t eligible even after applying buffer rule.

§  After applying buffer rule along with index continuity rule, we expect no additions and deletions of stocks from the MSCI Main Index.

§  LUCK cannot be added in this SAIR, as its market cap and free float market cap is still short by USD 35mn and 197mn respectively.

Full Report here