Karachi stocks get off to best start of year since 2007: Bloomberg

January 31, 2018


KARACHI: The equities in Pakistan are being viewed as the hot cake the world over as foreign investors have started snapping up their bargains in the country yet again.

According to a report by Faseeh Mangi published in Bloomberg, the nation’s shares worth $91 million were purchased in the first month of 2018 so far by global funds — the biggest monthly inflow in almost four years.

The bonanza helped push the 100 Index at Karachi Stock Exchange to its highest since 2007, recovering from a selloff that made Pakistan the worst stock market globally last year.

“This is just the high-risk hunters who are willing to bet at the beginning of the year,’’ said Aah Soomro, Karachi-based senior advisor at Tundra Fonder AB, which manages $350 million in equities and has been a buyer of Pakistan’s stocks this month. “The correction had been too steep.”

Holding it as a welcome sign, Bank of America Merrill Lynch cited EPFR Global 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 ouster of former Prime Minister Nawaz Sharif and widening deficits led to $494 million of stocks outflow last year even as the country was restored to emerging-market status by MSCI Inc.

Measures to repair the economy before elections in July — an unexpected hike in interest rates last week and the devaluation of the rupee in December to bolster foreign-currency reserves — are helping revive investor sentiment.

“The currency has been devalued a bit already and even though there might be another devaluation later this year, it shouldn’t be massive,” said Hertta Alava, head of emerging markets at FIM Asset Management Ltd. in Helsinki. More funds are waiting on the sidelines until the July polls are done “because in many other countries we’ve seen that election outcomes can be surprising,” she said.

About half of this year’s inflows have come from index-tracking funds and the remainder from investors who’ve made money in Pakistani stocks previously, Ovais Ahsan, head of broking at Optimus Capital Management Pvt., said. The KSE100 Index has risen in seven of the nine years since the nation was reduced to frontier in 2009.

“When global investors make money in stock markets, they never forget and always come back,” said Ahsan.