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Karachi stock exchange-100 index and MSCI index inclusion

Pakistan stock market is one of the oldest stock exchanges in South-Asia. It provides one of the best returns for the stock investors. Pakistan stock market became the part of the MSCI emerging market index in 1994 as a result of proving itself as the best performing stock exchange in the world. Unfortunately, political instabilities and security issues in the country affected the investment climate in Pakistan. As a result of global financial crisis temporary closure of stock market ultimately resulted in its removal from the MSCI emerging markets index at the end of 2008 and it was classified as a standalone country index. It was the time when whole world was under the clouds of economic recession.

Later on, in May, 2009, MSCI over viewed the performance of Karachi Stock Exchange 100 index and approved the proposal to add it in MSCI once again. But this time Pakistan stock market was included in the list of frontier market index and it remained as till June 2016.Pakistan stock market had 9% weightage MSCI frontier market index with as many as 16 companies.

In the view of improvements in transparency and liquidity in Pakistan’s stock markets, the proposal of adding Pakistan in MSCI’s emerging markets again came under discussion in 2015 and further reclassification of Pakistan stock market in emerging markets done on June, 2016. This reclassification process will bring bigger foreign inflows and attract global investors. It is also expected that most of the frontier market funds have faith in the efficiency of Pakistani market and will continue their investment in Pakistan after its reclassification as emerging market.

The announcement regarding up gradation from frontier market to emerging market has escalated the market index in last few months. Pakistan Stock Exchange is considered as the hottest equity market in South-Asia. In fact, it is declared as the fifth best performing stock index globally. Karachi stock exchange 100-index jumped 1000 points after the inclusion of Pakistan stock exchange in MSCI index. Globally, Karachi Stock Exchange 100 index has left many indices behind. According to the performance official report issued by MSCI, Karachi Stock Exchange 100 index stands among performing indices in the world.

Existing suitable investment scenario is helping Karachi Stock Exchange 100 index to reach its highest levels. Government announced amnesty program in 2012 and  it is also helping investors to revive Pakistan stock market .This program offers a safe pathway to the investors to pour money into domestic shares. Slowly and gradually investors are regaining their confidence in Pakistan’s equity markets.

China’s declaration of investing $46 billion to build China Pakistan Economic Corridor, will help  boost the Pakistan stock market and open the gates for further investment in the country’s infrastructure.

Despite troubled political conditions and instability in economy. Pakistan stock market successfully survived and overcome all the problematic issues. Hence, it succeeded  to restore its position as the best performing stock exchange in the world, where China’s stock market failed to become the part of MSCI emerging markets.

 

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About Emaad Qureshi