Daily Times

KARACHI: Trading at the bourse on Tuesday was underpinned by Morgan Stanley Capital International’s (MSCI) overnight announcement where the leading index provider rejected Engro Corporation (ENGRO) from MSCI Emerging Markets Index. The benchmark KSE-100 Index traded between an intraday high of 77 points and intraday low of 340 points, to close at 40,944, shedding 296 points.

In the wake of the removal, ENGRO crashed 5% with only 0.66 million shares exchanging hands. On the flipside, some respite was perceived on the external front given allowance of $3bn borrowing from international debt markets. At close, KSE-100 Index was down 0.7%; activity improved as volumes rose 60% while value was up 57%.

Morgan Stanley Capital International earlier on Tuesday announced the results of the November 2017 Semi-Annual Index Review for the MSCI Equity Indexes. Within the MSCI Global Standard Indexes, MSCI removed Engro Corporation (ENGRO) from the MSCI Pakistan Index; while there were no additions. All changes will be implemented after November 30, 2017.

ENGRO has been demoted to MSCI Global Small Cap Indexes, from which Ferozsons Laboratories (FEROZ), Pak Suzuki Motors (PSMC) & Shell Pakistan (SHEL) have been removed.

“As per our calculations, Pakistan’s weight in the MSCI Emerging Markets Index would drop to 0.08% after the removal of ENGRO from the earlier weight of 0.14%. Now, 5 stocks (large and midcap) remain part of the standard MSCI EM Index; Oil & Gas Development Company (OGDC), Habib Bank (HBL), United Bank (UBL), Lucky Cement (LUCK), and MCB Bank (MCB),” a report by Topline Securities said.

Amongst 5 MSCI EM stocks, highest weight was that of OGDC (based on free-float market cap), followed by HBL, MCB, UBL, and LUCK.

“This review has not been good for Pakistan where one major stock, ENGRO has been demoted, while from the initial inclusion of 33 stocks in the MSCI Pak Investible Market Index (IMI), 3 stocks have been removed, leaving behind 30,” the report added.

Worst index point performers were ENGRO (-5%), OGDC (-2.2%), DAWH (-5%), MCB (-2.1%) and PPL (1.3%) withholding 235pts out of which ENGRO was 85; while HBL (+1%), HUMNL (+4%), NESTLE (+1.3%), SEARL (+1.3%) & FCCL (+1.3%) added 56 points.

On the sectors front, tech, foods & textile cumulatively contributed 29 points to the index, while fertilizer hashed out 128 points, followed by E&P’s shedding 96 points and banks eroding 41 points.

Analysts recommended investors to stay cautious at current levels where any upside can be considered as an opportunity to reduce short term positions or book profits.

Published in Daily Times, November 15^th 2017.