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MSCI Downgrades Pakistan to Frontier Market After Four Years

Sep 26, 2018
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  • Nation doesn’t meet size, liquidity rules for emerging markets
  • MSCI starts process to add in MSCI Frontier Markets 100 Index

Index provider MSCI Inc. downgraded Pakistan to a frontier market, four years after its ranking was raised to an emerging market.

“Although the Pakistani equity market meets the requirements for market accessibility under the classification framework for emerging markets, it no longer meets the standards for size and liquidity,” according to a statement by MSCI. The proposal is to be implemented with the November semi‐annual index review, MSCI said.

The decision has been expected since Pakistan started falling below the MSCI’s criteria in terms of size and liquidity after its promotion to an emerging market in 2017. The South Asian nation’s benchmark KSE-100 Index rose to a record in the run up to the upgrade but slumped into a bear market soon after.

A corruption scandal involving then Prime Minister Nawaz Sharif sent foreigners on a selling spree. Overseas investors have sold shares worth more than $1 billion since the upgrade. The KSE-100 is down 12% from its record high and traded little changed at 10:05 a.m. local time in Karachi.

“After Pakistan’s downgrade, passive investors will have to sell around $100 million worth of shares in total, when the change becomes effective,” Brian Freitas, a New Zealand-based analyst who publishes on independent research website Smartkarma, said by phone before the decision.
Pakistan slumps after upgrade to an emerging market



Pakistan has a weight of 0.02% in the MSCI Emerging Markets Index, according to data compiled by Bloomberg. The MSCI Pakistan Index is made up of Lucky Cement Ltd., MCB Bank Ltd. and Habib Bank Ltd. Since Nov. 2019, none of them have met the size or liquidity criteria, MSCI said.

The country’s shares will be a bigger presence in the MSCI Frontier Markets Index with a weight of 1.9%, according to an MSCI simulation. The change will see funds increase their Pakistan holding to 10% within a year, said Mattias Martinsson, chief investment officer of Tundra Fonder AB.

MSCI also launched the consultation on the potential inclusion of Pakistan to the MSCI Frontier Markets 100 Index and the MSCI Frontier Markets 15% Country Capped Index as part of its May review.

“There is some excitement around the reclassification with the phrase ‘big fish in a small pond’ resurfacing but the pond has become smaller as funds tracking it have almost halved since 2016 to around $5 billion,” said Fahad Rauf, head of research at Ismail Iqbal Securities Pvt. “We do not expect any major inflows.”

 

ziaulislam

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Pretty much on cards after 2018 crash

Anyone knowing stock market knows what these decisions are based upon
 

Crimson Blue

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  • “After Pakistan’s downgrade, passive investors will have to sell around $100 million worth of shares in total, when the change becomes effective,” Brian Freitas, a New Zealand-based analyst who publishes on independent research website Smartkarma, said by phone before the decision.

And tht's why Karachi KSE-100 Index closed with gain ALL WEEK.

KSE-100 powers past 47,000 with 573-point gain
 

Desprado

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the stock mkt is slumping , volumes are down from ATH of 1000mn shares back in may and now back to 300-350 mil range ( which we saw in 2018 bear mkt )



corrections in a bear mkt are upwards

PTI fan boys were giving us predictions of 65k pts !
PTI is worse thing happen for Standard people of Pakistan. Even criminal have out performed them in every department.
 

Death Professor

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Thank god finally. We didn't deserve to be in emerging markets, and we got nothing out of being in emerging markets. One can check the FIPI/LIPI data, when we got upgraded from the frontier to emerging all the foreigners overall kept selling till today, it wasn't visable enough because locals were absorbing all that selling pressure. You will see positive things in the stock market after November. Now we are expected to get about 1.9% of the frontier share, previously we only got 0.02% of the emerging market share. There are big fish, in the emerging category, we don't get any lift in that category. Over all getting back into the frontier is a good thing.
 

salute

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So when did we have highest exports in history of Pakistan despite a pandemic?
Screenshot 2021-09-12 150746.png


In FY 19, Pakistan was already exporting over $24.2 billion and in FY 21 it went up by just 1,4 billion (less than 5%) after a record devaluation. If that is something to be proud of, only GOD can help Pakistan.
 

Patriot forever

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Fact :

More than $1.6b has left PSX since 2017 when Pakistan was classified as EM
. 😂

EM investors saw through the artificial currency manipulation and never invested in PSX. My God someone needs to learn to do propaganda by stringing together tweets. You probably have no idea what they are talking about.

PLMN supporter hallmark. ' Little knowledge with no understanding moja hi moja'.
 
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Patriot forever

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View attachment 777325

In FY 19, Pakistan was already exporting over $24.2 billion and in FY 21 it went up by just 1,4 billion (less than 5%) after a record devaluation. If that is something to be proud of, only GOD can help Pakistan.
The Indian comes to plmn support. Its getting harger day by day to differentiate between plmn media cell and BJP It cell.

There was a decrease 24.8b to 24.7b in 5 years while every other country increased their Exports, while the imports almost doubled.

This is what artificial currency does to countries. 😂
 

Desprado

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The Indian comes to plmn support. Its getting harger day by day to differentiate between plmn media cell and BJP It cell.

There was a decrease 24.8b to 24.7b in 5 years while every other country increased their Exports, while the imports almost doubled.

This is what artificial currency does to countries. 😂
Imports are more now even after devaluing currency 30%. 6.5 billion dollar in just 1 months. You guys were saying it's ok because you are blind you do not have any justification to defend devaluation. Imran Khan only increased 600 million export after devaluating the currency 30% and give trade deficit of 7.5 billion dollar in just 2 months.
 

Death Professor

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A retard from next capital is taken so much seriously these days. Half of his takes are just plain retarded.

People think 1.9% weight of the frontier market is permanent. The lot don't even know it is temporary and will only increase from that.



Just a day ago a new IPOs book building started, octopus digital was 27 times oversubscribed(not that it has anything with EM or FM). Just showing you the sentiments. And about the FIPI/LIPI data of the last 3 years, foreigners have been net sellers for the last 3 years and all that selling was absorbed by the locals. So yes going from Emerging to Frontier will definitely bring foreign investment like before.


FIPI LIPI.jpg
 

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