KARACHI: Morgan Stanley Capital International Inc., a global leader in investment decision tools and services, has added seven Pakistani companies to its Frontier Market (FM) and Small Cap Indexes in its latest semi-annual index review, marking a significant boost in the country’s global equity market visibility.
According to the announcement, three Pakistani companies — Fauji Cement Company, DG Khan Cement Company, and Maple Leaf Cement — have been added to the MSCI Frontier Markets Index. The inclusion will take effect at the close of trading on May 30, 2025. With these additions, the total number of Pakistani constituents in the MSCI FM Index will increase from 23 to 26.
“We estimate Pakistan’s weight in the MSCI Frontier Market Index has now increased to approximately 6–6.5%,” said brokerage house Topline Securities in its commentary. The addition of the three cement stocks alone contributes about 26 basis points to the index. “Assuming $2–3 billion worth of funds tracking the FM index globally, these companies could receive passive inflows of around $5–8 million,” it added.
Simultaneously, four Pakistani stocks have been added to the MSCI Frontier Markets Small Cap Index: Archroma Pakistan, At-Tahur Limited, Engro Polymer & Chemicals, and Pakistan Reinsurance. However, three companies were removed from the FM Small Cap Index — including AGP Pharma and Agritech Limited — while DG Khan Cement was moved to the main FM Index.
Despite failing to meet the minimum free float threshold of $78 million, Interloop, Searle Limited, and Abbott Laboratories have been retained in the index under MSCI’s buffer rule. The minimum market capitalisation requirement for inclusion remains $155 million.
This index review is of particular importance as Pakistan continues to rebuild investor confidence following its September 2021 downgrade from Emerging Market status back to Frontier Market. That reclassification came just four years after Pakistan had been upgraded in 2017 — a move initially seen as a major breakthrough for the country’s capital markets.
With the fresh additions, Pakistan’s representation in MSCI’s FM and Small Cap Indexes has been enhanced, particularly through the inclusion of cement sector leaders that are gaining traction amid improving construction activity and lower interest rates.
The changes are expected to trigger moderate passive fund inflows, improve visibility for Pakistani equities among global frontier market investors, and reaffirm Pakistan’s improving macroeconomic and market outlook.
