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Informist, Tuesday, Aug 13, 2024

 

--MSCI to up HDFC Bank foreign inclusion factor to 0.56 from Sep 2

--MSCI foreign inclusion factor for HDFC Bk currently at 0.37 

--MSCI adjustment factor for HDFC Bk 0.75 from August, not 1 

--MSCI to up HDFC Bk adjustment to 1 in Nov if FPI headroom over 20%

 

MUMBAI – Index provider MSCI late Monday said it will raise the adjustment factor for HDFC Bank for inclusion in its indices to 0.75 from Sep 2 from the current 0.5. It also said it will raise this adjustment factor to 1 for HDFC Bank from its index review in November, provided the headroom for foreign investors continues to be at least 20% at that time. While this change implies the weight for HDFC Bank in MSCI indices will rise, MSCI did not specifically say this. MSCI also did not provide the current and new weight for the HDFC Bank stock in its indices.

 

HDFC Bank is subject to a foreign ownership limit of 74% and, as per the latest shareholding disclosure, there is headroom for more than 25% new foreign shareholding in the stock, MSCI said. According to index rules, MSCI applies an adjustment factor of 0.5 to stocks with less than 25% headroom room for foreign shareholding, and it applies an adjustment factor of 1 for companies where the headroom for foreign investment is more than 25%, MSCI said. However, given the weight of HDFC Bank in MSCI indices, MSCI will apply the higher adjustment factor in two phases as above. 

 

MSCI will also increase HDFC Bank's foreign inclusion factor in the MSCI indices to 0.56 from 0.37 as of the close of Aug 30, MSCI announced late Monday as part of the index review for August 2024. These changes will take effect from Sep 2. 

 

MSCI said it will continue to monitor the headroom for foreign holding in HDFC Bank and issue further communication in case there are material changes in it.

 

On Monday, shares of HDFC Bank ended 0.6% higher at 1,660.10 rupees on the National Stock Exchange. End

 

Reported by Alina Geogy

Edited by Namrata Rao

 

 

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