KARACHI: Positive news on the economic front and aggressive foreign buying has led Pakistan among the top performing markets in the world during April, as according to MSCI, whose benchmark indices are widely followed by investors, Pakistani market gained 10 percent so far in April, analysts said on Saturday.
Among 12 countries in Asia as defined by MSCI, the Pakistani market has so far generated highest return in dollar terms during April, they said.
“All these countries in Asia belong to the emerging and frontier markets. Thus, Pakistan also outperformed MSCI Asian Emerging Index and MSCI Asian Frontier Index by eight percent and five percent, respectively,” Farhan Mehmood at Sherman Securities said.
Bangladesh, which underperformed last year amid slowdown in the economy, posted the second highest gain after Pakistan. However, the two other Asian markets India and Vietnam with the negative return of one percent and five percent are so far the underperformers during April, he said.
Moreover, looking at the global markets, Pakistan generated highest return in April after Ukraine. The UAE, which remained best performing market in 2013, is third best market so far in April. The much-awaited issuance of Eurobonds in April created positive sentiment in the market. A giant transaction allowed Pakistan to grab $2 billion, which is almost double than the earlier expectations.
“Thanks to improving economic indicators, well-directed economic policies and goodwill of the Nawaz government,” Mehmood said. Moreover, Moody’s, the leading credit rating agency, which is maintaining negative outlook on Pakistan’s bond reaffirmed the Finance Ministry that it may upgrade rating if Pakistan continues to improve its economic performance.
Not only this, Pakistan is able to capture higher weightage in the MSCI Frontier Market Index in recent MSCI’s review. This has allowed foreigners to allocate more funds to the local stock market.
Last but not the least, the results of successful bidders for 3G / 4G auctions will be announced on April 23.
The positive news was also reflected in buying pattern of foreigners, which now owns 33 percent of the free-float of the Pakistani market and 7.5 percent in market capitalisation.
So far in April, foreigners’ have bought shares worth $156 million, while they have sold $86 million shares, resulting in net buying of $70 million. Thus on a daily average basis, foreigners have bought Pakistan’s stocks worth $5 million so far in April, which is highest daily buying seen in a month since May 2013.
In May 2013, foreigners bought $12 million a day. Just to recall that was the same month when sponsors of Unilever bought its shares from the market, Mehmood added.
