Karachi, June 25, 2021 (PPI-OT): Pakistan’s reclassification to MSCI Frontier Markets proposed

It has been proposed to reclassify Pakistan from the MSCI Emerging Markets to the MSCI Frontier Markets. While the final decision is expected on September 7th, 2021, if implemented, it would take effect in the Nov-2021 Semi-Annual Index Review (SAIR).

As per the document shared by the MSCI, the steady decline in market capitalizations of the Pakistan equity universe since 2017 means that the number of eligible companies has consistently been below the minimum of 3 index constituents required for EM.

Since the November 2019 SAIR, there have been no securities in the MSCI Pakistan equity universe that meet the EM Size and Liquidity criterion under the MSCI Market Classification Framework.

Currently, the weight of the MSCI Pakistan Index in the MSCI Emerging Markets Index stands at ~0.02%.

If the reclassification takes place, the weight of MSCI Pakistan Index in the MSCI Frontier Markets Index is expected to be 2.3% whereas Pakistani securities would have a simulated weight of 5.8% in the MSCI Frontier Markets 100 Index.