The Financial Times Stock Exchange is likely to include Pakistan in the Global Equity Index Asia Pacific series this month and MSCI Incorporate, a US-based equity provider, fixed income and hedge fund stock market indexes and equity portfolio analysis tools, will hopefully upgrade the country’s stock market from its frontier market index to the emerging market status. The Pakistan Stock Exchange benchmark index emerged as the best performer in Asia last year, hitting a record in January with a return of over 50 percent. The up-gradation of the country’s economic status is being attributed to $50 billion Chinese investment in the economic corridor project. The government has sped up the process of reforms and is trying its best to improve the energy generation and supply situation ahead of the general elections next year. Despite repeated incidents of terrorism last month, the international investors are looking Pakistan as the attractive destination but the government is apparently unprepared to consume the large scale investment. The Pakistan Stock Exchange is showing good performance than India and the country has also improved its points in ease of doing business. The global investors are hunting for an economy which is poised for a long-term growth.
According to the World Bank reports, the economy of Pakistan will grow by 5.2 percent this year and 5.5 percent next year. Despite bleak performance of the agriculture sector, the projection of over 5 percent growth in the gross domestic product is seen promising. Experts believe the Pakistani stock market offers a favourable risk-reward ratio to the potential investors when it is juxtaposed with the emerging markets of India, Indonesia and Malaysia. The country will command a weight of around 0.2 percent in the MSCI EM index, leading to the flow of up to $275 million into the equity market.
Various Chinese companies are offering $35 billion investment in 19 power projects in Pakistan to generate 12,134MW electricity under the economic corridor project. The inclusion of six Pakistani stocks will ensure an inflow of $56 million into the country which will improve its financial healthagainst a surge of the current account deficit, which has recorded up to $4.7 billion during the first seven months of the current fiscal year. Experts opine the investment in the corridor project is equal to about 20 percent of the total GDP of the country and is being regarded as the game changer. It is hoped that another $35 billion investment in the energy sector will go a long way to cater to the energy needs of the country.
