In the last few years Pakistan’s equity market has been outperforming India and China’s markets.
According to Forbes, the last twelve months, Global X MSCI Pakistan ETF was up 20%, beating India’s and China’s comparable ETF’s by almost two to one.
Although Pakistan’s market is beating that of India and China, Forbes states it is lagging behind both these countries in key macroeconomic metrics like GDP, growth rates and unemployment. This according to Forbes can be attributed to Pakistan suffering from terrorism making it an unstable country for foreign investors.
Forbes says that one of the main factors for the success of Pakistan’s market is reforms which have been getting vote of confidence internationally such as that from the World Bank.
“That may come as a big surprise to some. Pakistan has been suffering all sorts of terrorist attacks,” remarked the Forbes article, contributed by Panos Mourdoukoutas.
“Terrorist attacks don’t usually affect financial markets, unless they are disruptive to trade, which hasn’t been the case in Pakistan, its market reform efforts have been getting a couple of votes of confidence from overseas like $1 billion in support from the World Bank – and a couple of domestic acquisitions from foreign suitors like the acquisition of Karachi’s K-Karachi by Shanghai Electric Power Co.”
“While Pakistan’s market has been getting a couple of endorsements from overseas institutions and investors, China’s markets have been unsettled, … And while India has stayed on course with reforms, execution is a problem,” the article remarked.