The Pakistan market has captured the attention of global investors in the midst of their high tensions with India, publication of the United States From Barron information.
In the last two years, the country has seen a “macroeconomic miracle.” While inflation decreased from 40 percent annual to almost zero, Eurobogos that mature in 2031 increased from 40 cents per dollar to 80 cents. The KSE-100 index has also tripled.
The government reached a “stabilization agreement” with the International Monetary Fund last September with the lender who approved an extended fund (EFF) installation of $ 7 billion. More than $ 2 billion have already been disbursed.
“Pakistan is a good story,” said Genna Lozovsky, Investment Director of Sandglass Capital Management. From Barron as saying. “So good that it is no longer risky enough for us.”
The media also declared that the recent conflict with India “will probably not eliminate the recovery of Pakistan”, but the “unstable foundations of the country could.”
“Pakistan has been known for the boom and fall cycles throughout its history,” according to Khaled Sellami, a sovereign debt manager of emerging markets in Barings. He said there are some signs that this time could be different.
The Pakistan stabilization period began with an almost by default experience in 2022-23 after the expulsion of Imran Khan. Alison Graham, investment director of the Frontier Markets specialist, Voltan Capital Management, declared: “Everyone thought that Pakistan does not come together with Sri Lanka in 2023”.
On the other hand, the State Bank of Pakistan increased interest rates from 10 percent to 22 percent, which put the country in the recession but twisted inflation.
Last year, the country obtained loans from Chinese sovereign creditors, Saudi Arabia and the United Arab Emirates, while GDP growth recovered to 2.5 percent. “The balance of the current account is positive and have a primary fiscal surplus [excluding interest payments]”Sellami said.” That is something we have not seen in many years. “
Pakistan remains in “relative stagnation” with cotton, clothing and cereals that represent two thirds of exports compared to the development of India in advanced industries such as you and pharmaceutical products. Sellami said: “It is moving late in subcontracting, foreign sales that rise from almost nothing to $ 3 billion annually in recent years,” and added that India was in the range of $ 200 billion.
Without a value ladder for climbing, the destination and the electoral cycles of free spending can continue to promote the boom and fall of Pakistan, according to Graham. She continued: “Pakistan is still extremely fragile for external shocks.
“When there is a rally, you must be early.”
Sellami was more optimistic, being “constructive” in Eurobonds Pakistani. He said that the country’s foreign friends, China and the Gulf states, made clear in 2022 that they were not writing blank. “The government knows that if they deviate from the tightrope they are walking, they will not have external finances,” he added.
On Monday, the Pakistan Stock Exchange (PSX) won a 9 percent record, the calm restored in the market reflecting that in the region after the recent Alto El Fuego de Pakistan-India that increased the mood of investors. “The market has reacted to the announcement of Alto El Fuego after Pakistan established an effective deterrence against India,” said Yousuf M. Farooq, director of Research at Chase Securities.
