The executive chairman of Templeton Emerging Markets Group, Mark Mobius is of the view that even though Pakistan has been upgraded to the MSCI’s emerging market indexes, Franklin Templeton Investments will continue to treat Pakistan as a frontier market. Mobius stated this when he made an announcement about the reopening of Templeton’s frontier fund to new investments after a gap of four years.
Mobius believes that the most significant things a money manager considers are corporate governance and transparency prevalent in a market whereas index providers may emphasise market size and volume of stock trading in their upgrade plans.
Bloomberg, in an article, quoted Mobius saying, “We don’t think Pakistan is ready to graduate to an emerging market yet. If the market cap increases, trading turnover and the number of shares increase, the index people may upgrade. But it can’t be said that companies have really improved their governance or improved their behaviour generally,” he added.
Irrespective of the classification, Mobius reveals that Templeton maintains a bullish stance regarding Pakistan’s equity markets.
Nadeem Naqvi in an interview with Bloomberg stated that he has huge respect for Mark Mobius as an old investor in Pakistan and his opinion is much valued. However, Naqvi disagreed with Mobius’ view that Pakistan is not yet prepared for the emerging market status. In an interview with Bloomberg on Tuesday, Naqvi said, “I will only say if you look at KSE100 company balance sheets, the kind of disclosure we have, the regulatory environment in code of corporate governance, which is of international standards — they are all at par.” He further informed that SECP is targeting 95 percent compliance in principles by June end this year.
Naqvi added that although Pakistan may be a narrow market, but he is confident that it is steadily moving upwards.
In a question regarding Pakistan’s share of mere 0.2 pc in the emerging markets index, he stated that considering Pakistan’s performance that has gone up 46 in 2016; 34 percent up since the MSCI’s announcement of Pakistan’s inclusion in the emerging markets in June last year and a cumulative 8 percent increase in the current year, investors may be losing out if they do not invest in Pakistani stocks.
He added that Bloomberg also termed Pakistan’s stock market as one of the best performing stock markets.
Moreover, Mattias Martinsson, the chief investment officer at Tundra Fonder AB, the only global fund that maintains operations in Pakistan, also stated that he is satisfied with corporate transparency in Pakistan.
“On the part of financial information disclosure Pakistan is not behind, rather the opposite,” Martinsson was quoted as saying.
