MSCI Announces Changes to Pakistan’s Representation in Frontier Market Indexes

MSCI Inc., a well-known provider of decision-making support, has revealed the results of its May 2025 index review, which includes adjustments to the constituents of its Frontier Market (FM) and FM Small Cap Indexes. Effective at the close of May 30, 2025, these changes will see the addition of three Pakistani firms to the main FM index and four to the FM Small Cap Index.

According to MSCI’s official statement, Fauji Cement Co, DG Khan Cement Co, and Maple Leaf Cement will be included in the MSCI Frontier Markets Indexes. Conversely, three Pakistani entities will be removed from the FM Small Cap Index.

A note from Topline Securities highlighted that the inclusion of these companies will increase the total number of constituents in the MSCI Frontier Index from 23 to 26. They also estimate that Pakistan’s weighting within the MSCI Frontier Market Index will be approximately 6-6.5%.

Topline Securities also mentioned that the addition of the three cement companies accounts for an estimated 26 basis points (bps). They project inflows of around $5-8 million into these companies, assuming $2-3 billion in funds are tracking the frontier market index on a global scale.

The brokerage further clarified that the minimum requirements for selection of frontier market stocks were a free float of $78 million and a total market capitalization of $155 million. They noted that Interloop, Searle Limited, and Abbott Laboratories would remain in the index, leveraging the buffer rule, despite not initially meeting the free float threshold of $78 million.

Moreover, Archroma Pakistan, At-Tahur, Engro Polymer & Chemicals, and Pakistan Reinsurance have been incorporated into the MSCI Frontier Markets Small Cap Indexes.

DG Khan Cement Co. will be moved to the main index, while AGP Pharma and Agritech Limited are set to be removed. It is worth noting that in September 2021, MSCI downgraded Pakistan from emerging market status, just over four years after its reclassification from the Frontier Markets (FM) Index.