There goes one bad news for the mighty Habib Bank.
According to KASB Securities Research Note, Habib Bank, one of the top big five banks in Pakistan, was ousted from MSCI Index including three more companies.
MSCI announced the results of the May 2012 review last night. The key takeaway from Pakistan’s vantage point is the exclusion of Habib Bank Limited from the MSCI Pakistan index, effective May 31st 2012.
“From Pakistan’s perspective, June 2012 remains the key where a favorable decision to upgrade UAE and Qatar to MSCI Emerging Markets should lead to ~130bp weight‐age gains for Pakistan in the Frontier Markets Index to ~5.7%”, the research note added.
The overall changes in the index increased weights of Fauji Fertilizer Company, United Bank, Engro Corporation and National Bank of Pakistan while it reduced holding of Pakistan Petroleum, Pakistan State Oil and Hub Power Company.
Pakistan is fifth in the index weight-age wise and is the highest weighted South Asian country in the index that includes Sri Lanka and Bangladesh. Neighbours India comes in the MSCI Emerging Markets Index which is an index above the Frontier Markets Indices.
The potential for Pakistan’s inclusion in MSCI Emerging Markets remain restricted by the fact that only three companies – Oil and Gas Development Company, MCB Bank and Fauji Fertilizer Company – currently meet the size criteria of $1,010mn market capitalisation and $505 million free float, which was the key reason highlighted during the MSCI annual review held in June 2011.
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