Pakistan has achieved medium-term macroeconomic stability over the past few years. The sentiment is reflected from the acknowledgements of the international financial institutes and credit rating agencies. Consequently, Pakistan Stock Exchange (PSX) has benefitted immensely from the increased business confidence in Pakistan. Pakistan has been ranked among top performing markets for the past few years. This encouraging performance also led to the reclassification of Pakistani stock market to emerging market by MSCI earlier this year. The bourse is at a record high and is expected to rise further in upcoming years.
Recently, it was decided by the SECP to divest 40 percent stake. The divestment is expected to help the Pakistan Stock Exchange (PSX) in expanding its capitalisation, resulting in increased foreign inflows. Moreover, reports suggest that the PSX is expected to see seven to eight new company listings in 2017 through the issuance of shares to the general public in initial public offerings. The companies that will make the initial public offering (IPO) will be from sectors like packaging, transportation, real estate investment trust, insurance and auto vendors. In addition to this, the government is also in the process of getting State Life Insurance Corporation (SLIC) listed on the stock exchange. The making and breaking of records at the PSX suggested that more companies would come to the exchange to raise interest-free funds in IPOs in a bid to develop new projects or expand their ongoing businesses, he said. Habib anticipated that a lot of positive happenings in the economy would support the benchmark index advance to 55,500 points by the end of December 2017. The bourse will continue to record strong returns in CY17, an assessment supported by the brokerage house Arif Habib’s price-to-earnings ratio (PER) re-rating hypothesis.
Pakistan needs concerted efforts to sustain the stable macroeconomic outlook. While the stock market was not severely affected by the international events, the local political turmoil did shook it. As the bourse is reclassified to the emerging market from the next fiscal year, Pakistan is expected to face effects of the shocks in the international arena. Moreover, the political circumstances in the country will continue to impact the situation. Therefore, it will remain high in consideration of potential foreign investors in the country.
With the launch of numerous infrastructure projects under the much-touted China-Pakistan Economic Corridor (CPEC), the economic activity has picked up in recent times and the forecasts by the international financial institutions expect Pakistan’s economy to grow in excess of five percent over the next five years. Pakistan stands at a point in the history where it has a real chance to kick-start the economic boost and join the developed world. For this purpose, the country needs sincere governance and other institutional reforms at the earliest. The improved security situation has also added to the confidence of the foreign investors. To sustain this progress the government will need to make sincere efforts to avoid any steps that could result in a political turmoil that could harm the potential investor’s confidence. *