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January 18, 2020

MSCI to Review Pakistan Market For Potential Upgrade to Emerging Markets

Geneva – MSCI, an international investment research firm, is adding Pakistan to its review list for a potential re-classification to Emerging markets from frontier markets as part of the 2016 Annual Market Classification Review.

The news of MSCI’s decision helped the benchmark KSE-100 index gain 0.2 percent at the close of trading on June 10, according to the Karachi-based brokerage firm Topline Research.

“The Pakistani equity market underwent a number of positive developments over the course of the past 12 to 18 months,” a June 9 MSCI statement said, giving the results of the MSCI 2015 Classification Review. MSCI’s All Country World Index (ACWI) is the industry’s accepted gauge of global stock market activity.

Emerging markets refer to countries which do not have economic strength of countries like the U.S. or Japan but are seen as being in the process of establishing a more mature marketplace. Frontier markets are categorized as the riskiest markets in the world to invest.

The MSCI noted improvements relating to the Launch of the Pakistan Unified Corporate Action Reporting System at the KSE; the introduction of restrictions on the Negotiated Deal Market (NDM) that aim to prevent unauthorized movement of client securities via NDM transactions; and  the development of an online complaint management system as key developments, leading to the decision.

“Most accessibility criteria of the Pakistani equity market meet the MSCI Emerging Markets standards, except for some potential issues with the stability of the institutional framework,” the statement said adding that “the Pakistani equity market has grown significantly and its liquidity has greatly improved.

In a recent report, the Khaleej Times said that equities in Pakistan, South Asia’s second-largest economy, have delivered 26 percent a year for U.S. dollar investors since 2009, making the KSE the best performing stock exchange in the world.

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