Pakistan risks expulsion from MSCI index due to KSE index freeze

[Naveed Yaseen]

LONDON, Sept 30: Pakistan’s imposition of a floor under its main stock index could see it expelled from the benchmark MSCI emerging equities index while Colombia’s recent easing of investment curbs could help the country remain in it, the index compiler’s research head said on Tuesday.

“If capital controls are strict and prevent investors from moving in and out, that country needs to leave the index,” Remy Briand, global head of index research at MSCI Barra, told Reuters.

“Definitely the situation in Pakistan is not good.”

Fund managers and other investors use MSCI’s emerging markets index to benchmark their investments, and removal from the index can exclude companies or markets from capital flows due to fund regulations.

The Karachi Stock Exchange imposed a floor on its benchmark 100-share index on Aug 27 as part of a series of steps taken by authorities there to protect share prices.

Colombia, along with Argentina, is among the countries with capital controls that could be removed from the MSCI Emerging Markets Index as part of a wider consultation expected to end by December.

But Colombia lifted its restrictions on foreign portfolio investments in shares on September 1.

“We are monitoring the situation but it’s a positive development. If there are no capital controls, there is no reason why we should transition Colombia

http://www.dawn.com/2008/10/01/ebr7.htm