WASHINGTON: (APP) Pakistan's stock mark rose 56 percent in the last twelve months and investors' perception about the potential of Pakistani economy could take the equity market much higher, according to a report published this week in online US magazine Forbes.
The benchmark KSE-Index had risen 500 percent since 2009 making the country's stock market one of the best performers in recent years, leaving markets in neighboring India and China far behind, the report said.
The report attributed the rally to a number of favorable economic fundamentals such as an improving macroeconomic environment, rising economic growth and falling inflation and interest rates.
"The country's economy grew close to 6 percent in 2016, up from 4.8 percent in 2015, with inflation running around 4 percent, down from 10 percent four years ago. And the 10 year Treasury bond is yielding 8 percent, down from 12.5 percent four years ago," the report added.
Pakistan's market reforms had also received overseas endorsements, including $1 billion in support from the World Bank. There had also been a spike in domestic acquisitions from foreign investors. Last year, FrieslandCampina, a Dutch company, bought majority shares in Engro Foods at an estimated price of $446.81 million, making it one of the major acquisitions in recent years.
A major boost had been the inclusion of Pakistan's market into Global MSCI's emerging market index, which the analysts, say will give a major boost to foreign investment in Pakistan. The upgradation of Pakistan's index will formally take place from May this year.
"Adding to these fundamentals is investor hype about the potential of the Pakistani economy which could take the equity market much higher," the Forbes report stated.
However, the report observed that the increase in current account deficit is one of the "red flags", coupled with the rise in imported oil that could push prices of basic commodities.