Friday, April 19

Pakistan Downgraded to Frontier Market

MSCI announced that it will reclassify Pakistan from an emerging market to a frontier market

The decision made on early morning Wednesday was rather anticipated

(MSCI) Morgan Stanley Capital International

Indexes are tracked by global institutional investors and asset managers alike

MSCI said that Pakistani Markets no longer met the criteria for Size and liquidity

Pakistan had a small equity weightage in the Emerging frontier market index where it was competing with more advanced emerging markets like China and India, in the EM index its weightage was reduced from 15 basis points to 2 basis points over the last few years

Note: one basis point = 0.1%

Now Pakistan would have a larger weightage in Frontier Index

A common metaphor being dubbed for today’s move is that Pakistan has gone from a small fish in a larger pond to a big fish in a smaller pond

The index is now touching 100 days moving average for the first time since May 2021

There appears no triggering point to break the resistance that the KSE100 faces beyond 47000. All of this is despite a phenomenal quarter in terms of earnings growth

There have been only trivial discrepancies on the Macroeconomic front ( the rupee has largely depreciated due to a stronger dollar in the light of potential federal reserve taper in the USA )

State Bank has kept the interest rates at 7 percent so there is nothing significant that can disturb the medium-term view

Covid’s fourth wave might have a role in the current market struggles to find bullish momentum but the chance of radical downward shift has dwindled away but still, covid’s relation with the benchmark index has been a fairly stronger one

MARKET HIGHLIGHTS

Current index 46,396

Change -333.25

High 46,875

Low 46,309

Previous Close 46,729

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