By Faseeh Mangi
Pakistans government has decided enough is enough: the $51 billion rout in the countrys stock market since its entry into MSCI Inc.s indexes two years ago must be stopped.
Prime Minister Imran Khans administration is putting together a fund with contributions from banks and insurance firms to buy stocks through a state-owned asset management company, according to the regulator. The fund, proposed by brokers this month, will be similar to the one that helped stabilize the Karachi market after the 2008 financial crisis.
Thats not all. The regulator has eased norms to allow companies to buy back more of their shares and is drawing up rules for allowing smaller firms and fintech startups to list with less stringent reporting standards. The measures aim to arrest a two-year slide that has made Pakistan the worlds worst-performing stock market.
“The fund is under serious consideration to be launched hopefully by next week to 10 days, Farrukh Sabzwari, chairman at the Securities and Exchange Commission of Pakistan said in a phone interview. “Youll get more color in the next few days” on the funds composition and size, he said.
Pakistans return to emerging-market status at MSCI in June 2017 proved to be a nightmare for investors, as it sparked outflows instead of the expected foreign inflows. The benchmark index has since slumped 31 per cent, and trades at one of the lowest valuations for any market at just over six times projected earnings.
Traders in the Karachi are no strangers to government support measures. A similar fund by the National Investment Trust in early 2009 put Pakistans market on a recovery path. Between the collapse of Lehman Brothers in September 2008 and the nations upgrade to an emerging market, Karachis benchmark index surged 300 per cent in dollar terms, the best stock-market performance in the world.
The market cheered the proposal, with the benchmark KSE-100 Index surging 2.6 per cent at 10:46 a.m. local time, set for the highest level in almost a month. “Investors are upbeat after the chairman commits a timeline for the fund," said Gohar Rasool, head of international sales at Intermarket Securities Ltd.
Uncertain Status
Pakistan is now barely visible in the emerging-markets universe, where giants like China and India attract all of investors attention. With a weight of a third of one percent in the benchmark index, the country is no more than a rounding error in global portfolios. The market has fallen below a keRead More – Source
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