ISLAMABAD: After six months of Osama Bin Laden’s killing, a foreign investor in Pakistan set up the country’s first foreign equity fund.
Pakistan was again in the bad news after the killing of Al-Qaeda leader in Abbottabad. However, the Swede investor named Mattias Martinsson invested $1 million of his own money and that of his partners and today the very fund is valued at $100 million.
It should be noted that the market spiralled downwards and the country became the last place for foreign investment.
In an interview, Martinnson said that Pakistan blocked NATO supply routes following the bombing of one of its military bases by the United States – causing the market to fall by 10 percent.
The foreign investor kept investing in the Pakistani stock market and in the situation started to change in 2012.
“The market went up and we raised $50m in three months,” Martinnson said.
He feels vindicated as the South Asian country entered the MSCI Emerging Markets Index on 1st June 2017 which was an indicator that the economic situation was changing.
It is pertinent to mention that MSCI Emerging Markets Index comprises of 23 high-growth economies including India, China and Brazil.
Pakistan was in the index of emerging markets but was downgraded to frontier market because of Pakistan Stock Exchange’s (PSE) decision to shut down for four months in late 2008 after a significant decrease in prices were witnessed.
Managing Director of PSE Nadeem Naqvi said, “We were kicked out in 2008 after the financial crisis because of measures Pakistan took at the time to stop foreign funds from fleeing the country. Obviously foreign investors got a rude shock,”
“We did a lot of lobbying and reforms to get re-included again into this index,” he tells me from Karachi. And he assures me and investors, that the KSE will be a liquid market. Parliament passed the Pakistan Stock Exchanges Act in 2012, which has improved corporate governance and reforms to prevent a reoccurrence of what happened in 2008,” he added.
A significant increase in Pakistan’s Gross Domestic Product (GDP) has also soared been recorded over the last few years. This was fuelled by the Chinese investment boom as part of Beijing’s One Belt One Road initiative.
$46bn is being spent by China on the construction of roads, ports and highways in the neighbouring country as part of the China-Pakistan Economic Corridor (CPEC).
Chinese investors own 40% of Pakistan Stock Exchange as well.