The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Opinion

Pakistan: Anyone for MSCI tennis?

If you have Wimbledon withdrawal symptoms, watch Pakistan’s status in MSCI’s indices, which has the same quality as a ball being smacked back and forwards during an interminable rally.

tennis-ball-spin-free-wet-960.jpg

The latest MSCI market classification review proposes to reclassify the MSCI Pakistan Index from MSCI’s Emerging Markets (EM) to Frontier Markets status. This is because Pakistan’s market no longer meets the standards for size and liquidity that the EM index requires. It also doesn’t have any big enough stocks.

As Renaissance Capital’s head of equity strategy Daniel Salter notes: “Our sense is that investors will probably not object to Pakistan being reclassified, though they might well be frustrated with the way Pakistan appears to ping pong between categories.”

Heart of the problem

Pakistan first entered the MSCI EM index in 1994 and stayed there happily until it was kicked out of the index in December 2008 after imposing floor prices “which led to the practical shutdown of the equity market,” Renaissance says. Six months later, in June 2009, it was reclassified from standalone status to the Frontier Markets index. Then in June 2017, it was reclassified again as a constituent of the MSCI EM Index. And now it might be going back the other way once more.

The heart of the problem is the abject performance of Pakistan’s equity market, which has declined by two-thirds in dollar terms since that June 2017 inclusion.


You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree