Morgan Stanley Capital International (MSCI) slightly raised Pakistan's weight in its flagship index to 0.080 percent in its semiannual review from 0.079 percent in November previous year, which analysts termed positive with a caution that China's inclusion might divert some foreign money. As the Wall Street Journal reports, the first batch on June 1 will have a 0.4% weighting in MSCI's Emerging Markets Index and a 1.3% weighting in the MSCI China Index, which now only offers offshore-listed Chinese companies.
"Consequently, we estimate Pakistan's weight in MSCI EM Index to slightly fall after partial inclusion of China A shares", stated Topline Securities.
MSCI further expelled Pakistan's retail favourites from the small cap index in its semiannual review as fading interest in the shares and decline in market capitalisation brought them out of limelight.
He points to ZTE, which "stopped trading in both its Hong Kong- and Shenzhen-listed stocks for a month, after the US banned American firms from selling products to the company", and China Railway Group, whose "Shanghai-listed shares have been suspended for almost two weeks, pending an announcement on its plan to change some of its debt into equity".
Post review, MSCI small cap index constituents are as follows: Engro Corp, FFC, Hub Power, PSO, POL, The Searle, NBP, Kot Addu Power, Fauji Cement, Maple Leaf, Nishat Mills, Millat Tractors, Packages Ltd, Bank Alfalah, Indus Motor, Fauji Fertiliser Bin Qaism, Engro Fertiliser, Honda Atlas, Inter Steel Ltd, DG Khan Cement, Sui Northern Gas and Thal Ltd.
MSCI announced early Tuesday morning Taipei time that it will lower Taiwan's weighting in the Emerging Markets Index by 0.21 percentage points to 11.13 percent and the country's weighting in the All-Country Asia ex-Japan Index by 0.25 percentage points to 12.84 percent. HBL still commands the highest weight of 28 percent in MSCI Pakistan (LARGE/MID CAP) INDEX, translating into 0.022 percent of the MSCI EM.
The next review of semiannual review of MSCI has been scheduled to be held on August.
Lin Liang-yi (林良一), manager of the Yuanta P-shares MSCI Taiwan ETF Fund, said the inclusion of Chinese A shares in MSCI indexes could lead foreign investors to put more of their funds into the Chinese market in the short term, but he believed the impact on Taiwan's market will be limited in the longer term. The second phase of the entry will take place in September.
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