PML-N alarmed over Pakistan’s expulsion from MSCI’s list of emerging markets

LAHORE: PML-N President Shehbaz Sharif has expressed grave concern and alarm over Pakistan’s expulsion from the list of emerging markets (EM) on the Morgan Stanley Capital International’s indexes.

In a statement, Shehbaz said this exclusion from the MSCI’s list was “deeply disturbing and worrying”. He said that this is indicative of the rapidly deteriorating economic condition, difficulties and miseries of the people of Pakistan.

“Pakistan’s relegation to the ‘Frontier Markets’ was an announcement of the economic crisis prevailing in the country. During Prime Minister Nawaz Sharif’s tenure Pakistan was included in the world’s 20 emerging economies. But in just 3 years, PTI has snatched away Pakistan’s ranking as an investment friendly country and its economic development,” Shehbaz said.

The opposition leader in the National Assembly claimed that the downgrade proves that the volume of the national economy had shrunk and its investment was drying out during Imran Khan’s tenure.

“This step by MSCI had endorsed the fears voiced by PMLN. It also proves that the international financial Institutions had rejected the economic statistics given by the PTI government,” claimed Shehbaz.

MSCI reclassifies Pakistan from Emerging to Frontier Markets

MSCI has announced the reclassification of MSCI Pakistan Indexes from EM to Frontier Markets (FM).

“The reclassification is a result of the three existing stocks, including Habib Bank Limited (HBL), MCB Bank (MCB) and Lucky Cement no longer meeting the standards for size and liquidity since the past two years,” an analyst at JS Global Capital said.

“The implementation will coincide with the November 2021 Semi-Annual Index Review, where we expect a cumulative net outflow of over $100 million from EM funds in HBL, MCB and LUCK.”

Pakistan will have an inclusion of four securities in the MSCI Frontier Markets Index with an estimated index weight of 1.90 per cent, compared with an estimated 6 per cent weight when Pakistan was a part of the Frontier Markets four years ago and was promoted to the Emerging Markets.

The results of another consultation regarding inclusion in the MSCI FM 100 and MSCI FM 15 per cent Country Capped Index, will be announced coinciding with the February 2022 Quarterly Index Review.

The reclassification to the Frontier Markets will be done in a single go in the November 2021 Semi-Annual Index Review (SAIR). To recall, MSCI had consulted with market participants till August 31, 2021 and after receiving relevant feedback, announced the decision on Tuesday evening.