Index provider MSCI Inc. downgraded Pakistan to a frontier market, four years after its ranking was raised to an emerging market.
“Although the Pakistani equity market meets the requirements for market accessibility under the classification framework for emerging markets, it no longer meets the standards for size and liquidity,” according to a statement by MSCI. The proposal is to be implemented with the November semi‐annual index review, MSCI said.
The decision has been expected since Pakistan started falling below the MSCI’s criteria in terms of size and liquidity after its promotion to an emerging market in 2017. The South Asian nation’s benchmark KSE-100 Index rose to a record in the run up to the upgrade but slumped into a bear market soon after.
A corruption scandal involving then Prime Minister Nawaz Sharif sent foreigners on a selling spree. Overseas investors have sold shares worth more than $1 billion since the upgrade.