Goldman Sachs contests S&P’s “Fragile Five”rating for Pakistan and other countries

S&P assigned these countries rating as the “Fragile Five” due to their heightened weaknesses to hike in interest rates and tightening monetary policy globally

LAHORE: Goldman Sachs Asset Management and other renowned money managers have contested Standard & Poor’s Global ratings for “Fragile Five” members which also includes Pakistan.

This group of “Fragile Five” developing nations is composed of Pakistan, Argentina, Turkey, Egypt and Qatar, this new grouping is an overhauled list created four years ago by Morgan Stanley, reported Bloomberg.

S&P assigned these countries rating as the “Fragile Five” due to their heightened weaknesses to hike in interest rates and tightening monetary policy globally. All the nations in this list are challenged by several political risks, starting from fraught relations in the Persian Gulf to Turkeys worsening relationship with Europe and its fiscal/current account deficits (excluding Pakistan) haven’t worsened to same levels compared to its past members.

According to fund managers, this has led to T. Rowe Price Group, Blackrock Inc and Goldman Sachs Asset Management buying bonds from these developing nations listed above.

While selecting above mentioned countries in “Fragile Five” list, S&P analyst Moritz Kraemer examined a group of 20 largest sovereigns by outstanding commercial debt to know which was in the most danger should interest rates be hiked, reported Bloomberg.

A JP Morgan Chase & Co analysts report claimed the situation isn’t as bad for most of these countries and emerging markets are less likely to tantrum concerns compared to 2013.

A lot of investors are monitoring the Pakistani market closely, which marred by political uncertainty has also reported weakening macro-economic indicators besides falling forex reserves and widening current account deficit due to rise in import bill.

Recent court action against ex-Prime Minister Nawaz Sharif and Finance Minister Ishaq Dar, who was declared absconder from the law recently has painted an impression of an improvement in national institutions.

Profit reported about the government bidding to boost exports by 10 per cent during financial year (FY) 2017-18 by offering tax breaks to businesses and suspend a three-year fall in exports besides reining in rising current account and trade deficits

In an interview to Bloomberg, Commerce Secretary Mohammad Younas Dagha claimed imports would fall by over $2 billion after imposition of regulatory duties on 700 items in October on luxury goods, which included cars, nail polish and other items.

- Advertisement -
- Advertisement -

Must Read

Understanding the Black Forest cake

This week, Profit’s cover story chronicles not just the metrics that can be used to figure out what income group constitutes ‘middle-class’ in Pakistan,...

Fiscal Federalism