KARACHI: The equities in Pakistan are being viewed as the hot cake theworld over as foreign investors have started snapping up their bargains inthe country yet again.
According to a report by Faseeh Mangi published in Bloomberg, the nation’sshares worth $91 million were purchased in the first month of 2018 so farby global funds — the biggest monthly inflow in almost four years.
The bonanza helped push the 100 Index at Karachi Stock Exchange to itshighest since 2007, recovering from a selloff that made Pakistan the worststock market globally last year.
“This is just the high-risk hunters who are willing to bet at the beginningof the year,’’ said Aah Soomro, Karachi-based senior advisor at TundraFonder AB, which manages $350 million in equities and has been a buyer ofPakistan’s stocks this month. “The correction had been too steep.”
Holding it as a welcome sign, Bank of America Merrill Lynch cited EPFRGlobal data in its research report that says emerging market stocks took in$8.1 billion in the week to Jan. 24, the second-biggest amount ever.
The Bloomberg report analyzes that political turmoil following the ousterof former Prime Minister Nawaz Sharif and widening deficits led to $494million of stocks outflow last year even as the country was restored toemerging-market status by MSCI Inc.
Measures to repair the economy before elections in July — an unexpectedhike in interest rates last week and the devaluation of the rupee inDecember to bolster foreign-currency reserves — are helping revive investorsentiment.
“The currency has been devalued a bit already and even though there mightbe another devaluation later this year, it shouldn’t be massive,” saidHertta Alava, head of emerging markets at FIM Asset Management Ltd. inHelsinki. More funds are waiting on the sidelines until the July polls aredone “because in many other countries we’ve seen that election outcomes canbe surprising,” she said.
About half of this year’s inflows have come from index-tracking funds andthe remainder from investors who’ve made money in Pakistani stockspreviously, Ovais Ahsan, head of broking at Optimus Capital ManagementPvt., said. The KSE100 Index has risen in seven of the nine years since thenation was reduced to frontier in 2009.
“When global investors make money in stock markets, they never forget andalways come back,” said Ahsan.