ISLAMABAD: The Bloomberg news has reported that Pakistan has plowed an independent trajectory this year, outperforming both its fellow frontier markets and members of the emerging-market groups that it was slated to join in 2017. The Bloomberg news, in its latest report, said that the country’s benchmark KSE100 Index has rallied 27 percent year-to-date to become Asia’s best-performing equity market in 2016, according to a basket of 26 peers tracked by the Bloomberg. The market received a boost in June when the Morgan Stanley Capital International (MSCI Inc.) announced that it would reclassify Pakistan as part of its benchmark emerging-market index from May 2017, a show of confidence that it declined to extend to China, the Bloomberg said. The newspaper further reported that it was a long time coming for South Asia’s second-largest economy. The Pakistan Stock Exchange (PSX), previously known as the Karachi Stock Exchange (KSE), was downgraded to frontier-market status in 2009 after it introduced curbs against sell orders to stem an investor exodus in late 2008. However, after registering gains over seven of the eight years since, investors were betting it still had further to climb. “The benchmark index could easily reach 60,000 before the general election in 2018,” said Faysal Asset Management Ltd Chief Vasseh Ahmed, in an interview. “Now that the International Monetary Fund (IMF) programme is over and the government would be giving incentives that would positively impact the market and business sentiment. The boost from the upgrade and Chinese investment was also there.” The report showed that the KSE100 Index reached its all-time peak of 41,464.31 last Friday in Karachi and was heading towards a new record. Last month Pakistan completed a three-year $6.6 billion IMF loan programme, report added. Prime Minister Nawaz Sharif, thanks to the aid, was able to avert a balance-of-payments crisis and boost foreign-exchange reserves to a new high. “Textile was already seeing the push, and the government may further boost the agriculture sector. The banking sector would also rebound given interest rates have bottomed, while the oil and gas sectors were rallying following a recovery in energy prices and infrastructure development,” said Ahmed. The country’s central bank has held its benchmark interest rate at 5.75 percent since cutting by 25 basis points in May. According to Federico Parenti, Milan-based Fund Manager of Base Sicav Emerging and Frontier Markets Equity Fund, Pakistan was on top of his wish-list. “My fund was currently waiting to get access to such a beautiful and nice market,” Parenti said through an e-mail. According to Exotix Partners Frontier-Markets Strategy Head Hasnain Malik, the country’s attractiveness depends on whether it could overcome vested interests to restructure its loss-making state-owned entities, and widen its tax base. “Without such reforms, Pakistan would remain a hostage to external factors, such as global risk appetite, oil prices, index changes as well as foreign aid and investment flows,” said Malik. For Parenti, the improvements that were predicted by EFG Hermes to lure around $475 million of inflows by the middle of next year do, in themselves, carried risks. “Because of the MSCI upgrade, the ratio of foreigners holding onto Pakistani stocks was set to increase,” the fund manager said. “But they would also add volatility since most of the money is ‘disloyal,’ meaning that they can easily pull their money out of the country whenever they want.” Still, he said that he had plans to allocate 10 percent of his funds to Pakistan once regulators give the go-ahead, with these challenges failing to overwhelm to the country’s enticing demographics. “The prospect was bright with the growing young population and the rising middle class. I want a piece of your economy, a piece of your frozen food, a piece of your cement, and a piece of your hospitals,” he wrote.