There is a chance Pakistan will be in the emerging markets again, while Pakistan’s far wealthier brother Saudi Arabia is nowhere close to entering the club, tracked by close to $1.7 trillion funds.
Indexer MSCI said today it will review Pakistan for a potential upgrade to emerging markets in its annual review next June.
Pakistan was at one point an emerging market, till it closed its Karachi Stock Exchange during the depth of the Great Financial Crisis. Other than that major hiccup, Pakistan’s stock market is liquid and deep enough to be an emerging market. See my April 24 column “Investors Rediscover Pakistan “. It now has its own country ETF Global X MSCI Pakistan ETF (PAK).
Meanwhile, MSCI said it will get “feedback from international institutional investors on the accessibility of the Saudi Arabia equity market” before considering “adding the MSCI Saudi Arabia Index to the review list for a potential inclusion in the MSCI Emerging Markets Index” That is a polite way of saying no to Saudi Arabia!
Saudi Arabia’s stock market is massive and liquid, but the Kingdom only decided last month to open its doors to foreign investors – very tentatively.
Just look at MSCI Frontier Markets (FM) breakdown, Pakistan is the fifth largest country with about 10% weight and Saudi Arabia is not even on the top ten because of its restrictions to foreign investors. Interestingly, even Oman, a rare oil-sparse neighbor, has about 6% weight.