13 companies likely to be added in MSCI FM 100

13 companies likely to be added in MSCI FM 100

Javed Mirza
May 10, 2022

KARACHI: The Morgan Stanley Capital International (MSCI) is expected to announce its Semi Annual Review (SAIR) on May 12, 2022, where a total of 13 constituents from Pakistan are expected to be added to the MSCI FM 100 Index.

The said changes will become effective from June 1, 2022. For the MSCI Pakistan Index, despite all top three constituents not fulfilling the total market cap requirement of $1.189 billion, Tahir Abbas at Arif Habib Limited believes there would be no change given applicability of buffer rule with Lucky Cement (LUCK), Habib Bank Limited (HBL) and MCB Bank, accumulatively rendering Pakistan’s weight to arrive at 1.07 per cent.

“In addition, Mari Petroleum (MARI) will not be part of MSCI Pakistan Index with low FIF factor as the main culprit, despite fulfilling total and free float market cap requirements. In addition, Meezan Bank (MEBL), which was not part of the MSCI Pakistan Investable Market Index (IMI) as of April 20, cannot be part of the MSCI Pakistan index”.

The MSCI has also announced special treatment for Sri Lanka and will not implement changes in the upcoming index reviews for any securities classified in Sri Lanka for the MSCI Sri Lanka.

The MSCI will also unveil the constituents for the MSCI FM 100. Pakistan was added in the MSCI FM100 and MSCI FM 15 per cent country cap Index with changes applicable from May 2022 SAIR.

“As per our workings, a total of 13 constituents from Pakistan are expected to be added to the MSCI FM 100 Index,” Abbas added.

These companies include ENGRO, Lucky Cement (LUCK), Hub Power Company (HUBC), United Bank (UBL), Habib Bank (HBL), MCB Bank, Fauji Fertilizer (FFC), Systems Limited (SYS), Engro Fertilizer (EFERT), Mari Petroleum (MARI), Millat Tractors (MTL), Pakistan Petroleum (PPL) and Pakistan Oilfields (POL) with a cumulative weight of 4.05 per cent in the index.

The highest weighted constituent will be ENGRO with a weightage of 0.43 per cent while the lowest weighted company will be POL with a weight of 0.20 per cent.

During the past 20 years, the KSE-100 index has generated a return of 14.5 per cent against 7.2 per cent return posted by the MSCI FM Index.

Pakistan’s stock market is the third most liquid market in the MSCI Frontier Markets. Additionally, it is the cheapest in terms of forward P/E ratio while only two other countries in the FM space currently operate at a lower P/B ratio (forward).