Pakistan: The hot Asian stock market hungry for foreign cash: Bloomberg

According to Bloomberg, the rebound that’s helped make Pakistan equities Asia’s best performers since the end of March isn’t done yet. Pakistan’s KSE-100 Index is up 36% from the end of March, the best rebound among major Asian equity indexes for the period. The central bank’s aggressive cutting of interest rates this year has reduced the double-digit returns from fixed income and bolstered the bullish case for equities.

A slowdown in the rate of new infections coupled with measures to boost an economy that shrank for the first time in seven decades prompted the Dubai-based FIM Partners in July to make Pakistan its biggest exposure after the Philippines.

“I see Pakistan becoming our largest exposure in the next six months,” said Mohammed Ali Hussain, research head at FIM Partners, which manages $1.6 billion. “Even after the rebound, there’s room for re-rating assuming the macro picture remains on track,” he said. In dollar terms, the KSE-100 Index is still down more than 50% from its life-time high reached in May 2017, he said.

Tundra Fonder AB, the Stockholm-based money manager known for its early bet on Pakistan, said the nation has the largest allocation in its frontier fund.

“Covid-19 interrupted everything but our argument from July last year that the next four-five years should be very good for Pakistani equities is valid,” said Chief Investment Officer Mattias Martinsson. “Given the low foreign appetite for emerging and frontier markets, it remains to be seen if foreigners participate.”

Source: Bloomberg