More Upside Seen for Pakistan Following EM Upgrade

The Global X MSCI Pakistan ETF (NYSEArca: PAK), the lone exchange traded fund dedicated to Pakistani equities, surged earlier this week after index provider MSCI said it is elevating the country’s equity market to emerging markets status from the frontier markets classification.

Although the promotion was widely expected and is now known throughout the investment community, some market observers see significant upside ahead of Pakistani stocks, including some of the names found in PAK.

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MSCI said the MSCI Pakistan Index will be reclassified from frontier at its May 2017 semi-annual index review and the country will receive a 0.14% tilt in the MSCI Emerging Markets Index.

“Credit Suisse thinks that Pakistan could take a page from the United Arab Emirates and Qatar, which rose more than 45% in the 12 months after gaining inclusion in the MSCI EM index,” reports Dimitra DeFotis for Barron’s.

Pakistan is the first country since Qatar and UAE in 2013 to earn the frontier-to-emerging promotion. Following previous MSCI upgrades, the United Arab Emirates and Qatar saw their benchmarks jump by at least a third in the 12 months following June 2013.