MSCI Adds One More PSX Company to its Frontier Markets Index

MSCI has announced its August 2025 Index review, wherein 1 new stock of Pakistan is added to the frontier market index, namely Faysal Bank (FABL). This takes the total number of constituents in the MSCI Frontier Index to 27 from 26 earlier. These changes will be implemented as of the close of August 26, 2025, according to Topline Securities. Based on details updated on the MSCI website, in the August 2025 review, the minimum threshold of free float and total market cap for the selection of frontier market stocks was US$90 million and US$181 million, respectively. This threshold is significantly higher by 15-17 percent than the May 2025 review and largely in line with the performance of the frontier markets. Since the last review of MSCI, the Pakistan market outperformed the benchmark frontier index by providing a total USD return of 24 percent in May, June, and July 2025 (3 months) while the return of the MSCI frontier markets index was 20.4 percent. Amongst the existing constituents, 3 scrips are retained despite not meeting the free float criteria for the second consecutive review, namely LIP (US$87 million), ABOT (US$181 million), and SEARL (US$86 million). Under the buffer rule, these stocks are retained. Topline said traders saw in the past retention of TRG that, despite not meeting the threshold, it was subsequently removed from the index in upcoming reviews. Pakistan’s weight in the MSCI frontier market index is close to 6-6.5 percent, with FABL adding 8bps to the total index. The addition of a new company constitutes a weight of 8bps. Assuming US$2-3 billion in funds tracking the frontier market index globally, inflows in these companies are estimated at around US$1.5-2.3 million. Given the fact that Pakistan is currently not part of any passive fund manager, the activity in MSCI-based scrips may remain muted. MSCI has also added 2 stocks in the small-cap index, namely Indus Dyeing (IDYM) and Jubilee General (JGICL). While 2 stocks were deleted, namely Habib Sugar (HABSM) and Octopus (OCTOPUS).