KARACHI: The KSE-100 index has endured a fall of 16pc since Pakistan’s reinstatement into MSCI Emerging Markets (EM) index since June 1st, 2017, said a Topline Security analysis.
In comparison, MSCI EM (Asia) index has gone-up by 12pc in the aforementioned period. On a year-on-year basis, Pakistan Stock Exchange is down 13pc, whilst MSCI EM (Asia) Index has risen by more than 28pc, which highlights the underperformance of former by 41pc.
Pakistan joined Indonesia, India, South Korea, Malaysia, Taiwan, Thailand, Malaysia and China as part of MSCI EM (Asia) index and all these markets have outperformed PSX from the date of its reinduction on June 1st, 2017.
PSX has endured a windfall and deteriorating performance over the last few months due to mounting political instability/turbulence coupled by worrying macroeconomic indicators at the external front and sliding foreign currency reserves.
This follows trends during financial year 2013 when the country’s forex reserves declined by over $4b and elections also took place at the same time.
The country’s equity part experienced net foreign outflows of $98m from June to date, whilst January net foreign selling to date worth $439m took place. This compares to $315m and $339m net foreign outflows during FY 2015 and 2016 respectively.
Comparing this to EM flows, as per Institute of International Finance (IIF), they amounted to $183b from which 50pc were estimated to be equity related.
Also last week, Security and Exchange Commission’s (SECP) decision to raise investment cap for mutual funds from 95pc to 100pc cash, gave Pakistan Stock Exchange much needed respite in terms of liquidity last week.
Because of this change, equity funds injected an additional Rs15b in the stock exchange last week, reported Express Tribune.
This also resulted in mutual funds becoming the largest buyers of stocks last week with investment of over Rs1.79b ($17m) and digested selling from foreign and local investors.
Pakistan also re-entered S&P’s Emerging Broad Market Index from S&P Frontier BMI in mid-September.
