20 October 2016: Pakistan has outperformed both its fellow frontier markets and members of the emerging-market grouping that it is slated to join in 2017. The KSE100 Index has rallied 27 percent year-to-date to become Asia’s best-performing equity market in 2016, according to a basket of 26 peers tracked by Bloomberg (photo, below).
“The benchmark index can easily reach 60,000 before the general election in 2018,” said an investment analyst.
15 June: MSCI said its Pakistan Index will be reclassified to the Emerging Markets status, effective May 2017 Semi-Annual Index Review.
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Wall Street Journal published this optimistic forecast for Pakistan: Index provider MSCI has revealed it plans to consider upgrading Pakistan from frontier- to emerging-market status next year.
WSJ says: Citing “a number of positive developments over the course of the past 12 to 18 months,” MSCI said it would include Pakistan on its 2016 review list.
News that Pakistan is being considered for inclusion in the MSCI emerging markets index will be seized upon by a government desperate for international recognition of what it says are its achievements in stabilizing the Pakistani economy.
The government of PM Sharif, who came into power in June 2013, inherited low growth, high inflation, a foreign-exchange reserve crisis and crippling electricity shortages.
Since then, inflation has dropped sharply and foreign exchange reserves are more comfortable.
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The government is now on a mission to boost economic growth from the anemic 3 percent that it inherited to around 7 percent by the end of its five-year term. The IMF expects GDP growth to hit 4.3 percent this year and rise to 4.7 percent in 2016.
Pakistan has already achieved recognition among frontier-markets analysts, including Renaissance Capital, which describes the country as “the best undiscovered investment opportunity in emerging or frontier markets.”
June 2016: Pakistan stocks jump most in a year as MSCI upgrade seen luring cash.
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Pakistan was last in the MSCI emerging markets index in 2008 and brokers said its re-inclusion would be positive.
“Not only size of passive fund flows will increase, many large [emerging markets] funds may return back to Pakistan,” Karachi brokerage Topline Securities said.
Text: Saeed Shah, WSJ | Infographics: Bloomberg, The Economist, MSCI.
20 October 2016: Pakistan outperforms frontier and emerging markets in 2016.
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