Weight of Bangladesh in the MSCI Frontier Markets (FM) Asia Index in August was 14.62 per cent of the total index.
The index captures large and mid-capital representation across four countries - Bangladesh, Pakistan, Sri Lanka and Vietnam.
The index includes 33 constituents, covering about 85 per cent of the free float-adjusted market capitalisation in each country. It is basically a reflection of investable options in the stock markets of the respective countries.
In the month of August, among the top 10 constituents, only one was from Bangladesh. It was Square Pharmaceuticals having 6.1 per cent of the total index weight.
Bangladesh entered into the MSCI Frontier Market Index in 2010. Pakistan and Sri Lanka were included in the same index in 2009 and 2007 respectively. Both the countries, earlier, were included in the MSCI Emerging Market Index.
But, Pakistan was removed from the emerging market index in December 2008 and remained as a standalone country index for a brief period. Sri Lanka was also removed from the same Index in June 2001 and maintained as a standalone country index for long time.
MSCI will, however, communicate its final conclusions on the potential inclusion of Pakistan into Emerging Markets in June 2016.
Frontier markets represent a tiny segment of the world investment universe, but interest in the asset class has been growing, as investors search further afield for better growth opportunities and pursue new ways to diversify their portfolios. Frontier markets, by definition, are at the far edge of the investment universe and are generally not included in global equity indexes or even in many emerging-markets equity funds. This is because frontier capital markets are not easily accessible. These markets tend to have a small number of liquid securities and restrictions on foreign ownership.
There are 33 countries whose stock markets are considered frontier market by MSCI.
MSCI Incorporated is a US-based provider of equity, fixed income, and hedge fund stock market indexes, and equity portfolio analysis tools. It is widely known for publishing the MSCI World and MSCI EAFE Indexes.
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