NEW YORK: Some of the world’s top asset managers are eyeing Pakistan’s $50 billion stock market after it delivered one of the best global returns in 2024, Bloomberg reported on Wednesday.
The report said asset managers from companies namely BlackRock Inc, and Eaton Vance Corp, are “warming up” to Pakistan’s stock market which handed investors 84 percent returns in 2024.
“Attractive valuations and a stabilising economy have improved the outlook for local shares, with Intermarket Securities Ltd predicting a gain of about 40 percent for the main KSE-100 Index this year,” it stated.
“You don’t have to stretch your imagination to make an investment case for Pakistan,” said Steven Quattry, New York-based portfolio manager at Morgan Stanley Investment Management Inc.
The Pakistan Stock Exchange (PSX) performed extremely well last year, propelled by the International Monetary Fund (IMF)’s $7 billion bailout package.
Last week, the global credit rating agency Fitch recognised Pakistan’s progress in advancing toward economic stability.
In a note, the agency had said, “Pakistan has continued to make headway restoring economic stability and rebuilding external buffers.”
The agency last year upgraded Pakistan’s long-term foreign-currency issuer default rating (IDR) to CCC+ from CCC.
According to Bloomberg, the optimism in the stock exchange was shown in foreign fund allocations, adding that Pakistani stocks had a 5 percent weight in BlackRock Frontiers Investment Trust as of December 2024.
“Eaton Vance also re-entered the market in the June quarter following a brief exit,” the report said.
According to data compiled by Bloomberg, Legal & General Investment Management Limited and Evli Fund Management Company have also raised holdings.
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Mohammed Sohail, CEO of Topline Securities, a brokerage firm in Karachi said the current level of foreign investor interest is comparable to the peak years of 2014-2018.
“A downgrade in the nation’s status to frontier market status by FTSE Russell that took effect in September hurt sentiment, prompting foreigners to turn net sellers in the last three months of 2024,” the report said.
However, it noted that despite challenges, investors remained optimistic given the improving external finances and foreign exchange reserves.
