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Express Tribune
14-05-2025
- Business
- Express Tribune
Three cement firms join MSCI frontier index
Listen to article Morgan Stanley Capital International (MSCI) has included three Pakistani companies in its Frontier Market (FM) Index and four more in its FM Small Cap Index as part of the May 2025 index review. MSCI, a prominent global provider of investment decision support tools, announced the results of its May 2025 semi-annual index review, bringing major changes for Pakistan's listed companies in both the MSCI Frontier Markets Standard and Small Cap indices. The changes, effective after the close of trading on May 30, 2025, highlight increased representation of Pakistan in the global investment landscape, particularly in the cement sector. According to Arif Habib Limited (AHL), Pakistan's weight in the MSCI FM Index is now estimated at around 6.1%, reflecting growing investor interest and improving market performance. As per the review, three cement companies - Fauji Cement, Maple Leaf Cement and DG Khan Cement - have been added to the MSCI FM Standard Pakistan Index. With no deletions reported, the total number of Pakistani constituents in the standard index now rises to 26. This includes major blue-chip names such as UBL, Lucky Cement, OGDC, Engro, MCB Bank, HBL, FFC and now the three cement firms. Topline Securities, in its research note, estimated that the combined weight of the three added stocks was 26 basis points (bps) in the FM index. Given that global funds tracking the MSCI's Frontier Index amount to around $2-3 billion, Pakistan could attract an estimated $5-8 million in passive inflows through these additions alone. Interestingly, DG Khan Cement's promotion comes at the cost of its removal from the MSCI Small Cap Index, highlighting its upgraded market status. Meanwhile, the small-cap index saw the addition of four companies – Archroma Pakistan, At-Tahur Limited, Engro Polymer & Chemicals and Pakistan Reinsurance Company. On the flip side, AGP Limited and Agritech Limited have been deleted from the MSCI Small Cap Index. The MSCI Small Cap Index now contains 410 constituents globally, with 67 stocks from Pakistan, making up roughly 16% of the total index and holding a 10.7% weight. Topline noted that companies like Interloop, Searle and Abbott Laboratories were retained in the index despite not meeting the minimum free-float threshold ($78 million in the latest review), citing the MSCI's buffer rule as the likely reason. This rule allows companies slightly below the threshold to remain in the index to minimise excessive churn. The inclusion criteria for this review were stricter compared to the previous one in February 2025, with the minimum free-float market cap raised to $78 million from $72 million, and the total market cap requirement up to $155 million from $145 million. Maaz Azam, Head of Research at Optimus Capital, told The Express Tribune that while the latest MSCI index review brings positive news, the true success for Pakistan will lie in re-entering the emerging markets (EM) category. The MSCI index changes are widely watched by institutional investors and passive fund managers around the world. The increase in Pakistan's representation may not only lead to short-term capital inflows but also signal growing confidence in the country's economic and market fundamentals.
Business Recorder
14-05-2025
- Business
- Business Recorder
MSCI adds 3 Pakistani cos to Frontier Market Index, 4 to FM Small Cap Index
Morgan Stanley Capital International (MSCI) Inc., a leading provider of critical decision support tools and services, announced the addition of three Pakistani companies as constituents on its Frontier Market (FM) and four companies in its FM Small Cap Index as part of its May 2025 index review. Meanwhile, three Pakistani companies have been removed from its FM Small Cap Index. In the MSCI Frontier Markets Indexes, three Pakistani companies have been added, stated MSCI in the note. These companies include Fauji Cement Co, DG Khan Cement Co and Maple Leaf Cement. These changes are to take effect from the close of May 30, 2025. 'This takes the total number of constituents in the MSCI Frontier Index to 26 from 23 earlier,' said Topline Securities in its note on the review. 'We estimate Pakistan's weight in the MSCI Frontier Market Index is close to 6-6.5%,' it added. MSCI adds 8 Pakistani companies to Small Cap, removes TRG Pakistan from Frontier Markets Indexes Topline said that the addition of three cement companies constitutes a weight of 26 basis points (bps). 'Assuming $2-3 billion funds tracking frontier market index globally, the inflows in these companies are estimated around $5-8 million,' it said. The brokerage house noted that the minimum threshold of free float and total market cap for the selection of frontier market stocks was $78 million and $155 million, respectively. Topline also highlighted that Interloop, Searle Limited and Abbott Laboratories are retained in the index despite not meeting the free float threshold of $78 million based on the buffer rule. Meanwhile, four Pakistani securities were added to MSCI Frontier Markets Small Cap Indexes, including Archroma Pakistan, At-Tahur, Engro Polymer & Chemicals and Pakistan Reinsurance. While one stock is moved to the main index, i.e. DG Khan Cement Co, and two are deleted, namely AGP Pharma and Agritech Limited. In September 2021, Pakistan was downgraded from its status as an emerging market, a little over four years after it was reclassified from the Frontier Markets (FM) Index by MSCI.
