Pakistan’s weight in Morgan Stanley Capital International (MSCI) Frontier index has increased to four percent from 3.76 percent earlier, but the likelihood that Pakistan is put up for a review for upgrade to Emerging Market in the next crucial announcement of the Annual Classification Review remains remote.
According to Imtiaz Gadar at KASB Securities Limited, MSCI has decided to exclude Trinidad and Tobago (0.8 percent weight) from the MSCI Frontier Index and the decision will be implemented in May 2011 and should lead to nominal weightage gains for Pakistan.
While the next review will due to be held in May, the next crucial announcement should be in the June Annual Classification Review. It has been indicated that the probability of Pakistan being put up for an upgrade review to Emerging Market appears relatively low at this stage. UAE and Qatar have been under review for an upgrade to Emerging Markets since 2008, and if they are able to transcend to Emerging Markets in the review, it could lead to gains for Pakistan. These two markets carry weights of 8.3 percent and 11.6 percent respectively in MSCI FM and crude numbers suggest their migration could lead to a one point increase in Pakistan’s weight to five percent. The timeline for implementation however could be somewhat drawn out. For instance, MSCI announced an upgrade for Israel from EM to DM in the June 20009 review but implemented the decision in May 2010, he said. It was noted that if a similar timeline is followed with regards to any upgrade for UAE and Qatar and any positive impact on Pakistan’s position would be unlikely to occur before May 2012, he reasoned.
