Pakistan’s stock exchange lobbying to restore emerging market rank
KARACHI: Pakistan’s stock exchange, slumped from the MSCI Emerging Markets Index in 2008, is starting a ‘final push’ to acquire back in so it can vastly increase its pool of potential shareholders, board chairman Muneer Kamal has said.
He said he is ‘reasonably confident’ Pakistan will be restored to the index when a decision is announced in June. Next week, members of the newly consolidated Pakistan Stock Exchange will be in London to lobby the MSCI and influential investors, Kamal said. A meeting for Pakistan to make its case to 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 Karachi Stock Exchange was temporarily closed in late 2008 to prevent investors from withdrawing funds. The exchange has applied for inclusion the last two years, gaining review status last year. In 2015, the benchmark KSE100 rose 2 percent. This year, it has shed 5.8 percent, 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 Pakistani advocates plan to highlight in London.
Kamal said he knows the 2008 closure is 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 now has gone. Even if we want to, we cannot do that.”
Pakistan’s main advantage from regaining emerging market status would be that it would make its 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,” he said. “But anything can happen.”