PSX lobbying to win back emerging market status

Latest Update: February 27, 2016 | 292 Views

KARACHI: The stock exchange, dropped from the MSCI Emerging Markets Index in 2008, is launching a final push to get back in so it can vastly expand its pool of potential investors, Pakistan Stock Exchange (PSX) Board Chairman Muneer Kamal said.

He was “reasonably confident” Pakistan would be restored to the index as a decision is expected to be taken in June.

Next week, members of the newly consolidated PSX would be in London to lobby the MSCI and influential investors, Kamal said.

A meeting for Pakistan to make its case to the MSCI will be on March 3. “Our numbers have improved, our qualitative governance has improved,” Kamal said in an interview this week.

Pakistan was excluded from the emerging markets index and classified as a higher-risk frontier market after the former Karachi stock exchange was temporarily closed in late 2008 to prevent investors from withdrawing funds.

The exchange has applied for inclusion in the last two years, gaining review status last year.

In 2015, the benchmark KSE 100-share index rose 2%. This year, it has shed 4.6% till close of market on Friday, pulled down along with most other markets by concern over China’s economic slowdown and global growth.

The main Karachi stock exchange recently merged with smaller bourses in Islamabad and Lahore to form a consolidated exchange with new rules and oversight, a development advocates plan to highlight in London.

Kamal said he knew the 2008 closure was an obstacle to reinstatement in the MSCI index.

“The one question they keep asking and they will continue to ask us is, ‘What is the guarantee that you will not shut your market again’ – as we did in 2008,” he said.

“One of the answers to that is that now the power in the stock exchange board has gone. Even if we want to, we cannot do that.”

The main advantage from regaining the emerging market status would be that it would make Pakistan equities open to large international investment funds barred from buying higher-risk frontier market stocks.

Restoration would open the way to get huge inflows, Kamal said. “If you ask me today, I am reasonably confident Pakistan will come back as an emerging market. But anything can happen.”



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