MSCI Inc. will maintain HDFC Bank Ltd. in its global gauge for emerging markets under its August review, with an increase in the foreign inclusion factor from 0.37 to 0.56 as of Aug. 30, effective from Sept. 2.
India's top private lender is subject to a foreign ownership limit of 74% and an adjustment factor of 0.5. The bank reported a reduction in foreign institutional investors’ shareholding to 54.83% in the June quarter, down from 55.54% in the previous quarter.
Securities with foreign room greater than 25% are maintained in the MSCI GIMI Indexes with the adjustment factor of 1, as mentioned in the MSCI Global Investable Market Indexes methodology.
"However, in view of the significant weight of HDFC Bank in the MSCI India Index, MSCI will apply an adjustment factor of 0.75 along with the August 2024 Index Review," the global index provider said.
The remaining increase of the adjustment factor from 0.75 to 1 would be implemented as part of the November Index Review, in the event the foreign room continues to be at least 20% at that time.
The firm will keep a close watch on the foreign room of HDFC Bank and will provide additional updates if there are significant changes to its foreign room, it said.
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