Pakistan stocks rally

Pakistan’s stocks are considered the best in the world and have outperformed all stocks markets around the globe. This will give impetus to the government’s claims that the results of economic reforms are finally bearing fruit and the economy is heading in the right direction.

According to the reputed financial daily Bloomberg, Pakistan Stock Exchange outshined world’s leading stock markets during the last three months due to the government’s efforts to stabilize the economy. This includes a $6 billion IMF bailout and assistance from financial institutions. 

The report said that Pakistan’s stocks surged by 30 percent (10,000 points), while Ireland’s stock market increased by 20 percent, followed by Russia’s RTS index which saw a positive change of 15%. The KSE-100 Index has increased to the highest level in seven months, after falling to the lowest in almost five years. At the same time, bond yields have begun to fall after peaking around 14 percent mid-year, prompting investors to shun equities and debt investments.

Investors will be relieved to hear that the rally which helped stock trounce the rest of the world is not done yet and will continue further. Large investors, including mutual funds and insurers, are expected to jump as returns from fixed incomes have begun to recede. 

Many investors will consider riskier options now as the stock market appears to be a safe bet. This rally will continue as more investors come in. Foreign investors have bought $64 million of the stocks this year, making it the first annual inflow since 2014. 

This rally could further gather pace next February when will Pakistan appear for another review before the FATF. The nation avoided a blacklist after making enough progress on anti-money laundering and terror financing laws.  Pakistan will have to provide further evidence before being removed from the grey list. If in case this happens, the country could witness a spike in lucrative stock investments.

The news would be music to the prime minister and his economic team’s ears.  Imran Khan has time and again stated that opposition parties are silent on the economic uptick and are instead resorting to other tactics such as holding protests and demonstrations. 

The economic indicators suggest that the economy is recovering as the current account deficit has turned into surplus for the first time in four years and exports have risen. As political threats wither away, an economic resurgence will surely strengthen the government.