Pakistan now Asia''s second worst performing market: research report

Pakistan has become the second worst performing market in Asia, as after posting average annual gains of 28 percent during the last 10 years, it is down by 45 percent in US dollar terms in the current year from January 01, 2008 to date, analysts said.
"The slowdown in the overall economy, coupled with political uncertainty after the February election has affected investors'' sentiments, Mohammed Sohail, senior analyst at JS Global Capital said in a research report and added that a decline of 19 percent in Pakistan currency to date has also eroded equity values in dollar terms.
The research report said that the global credit crunch and the turbulence in the currency markets have significantly shaken investors in the global equity markets. The emerging markets which were believed to be protracted with global credit crunch, spiralling inflation at the back of soaring oil and food prices, led these markets to drop significantly so far in the calendar year 2008. MSCI Asian Emerging Market Index is down 29 percent to date.
Analysing the performance of 13 Asian emerging countries, China ''s Shanghai market ranks the worst performing market so far in 2008 with the index fell by 52 percent. This is followed by Pakistan and Vietnam which are down 45 percent and 44 percent in dollar terms, respectively.
China''s Shanghai Index which had recorded a peak level of 5771 in the early 2008, is down due to rising concern over slowdown in economy and mounting inflation - or stagflation. Likewise, in Vietnam, recent ratings cut and record inflation have worsened market sentiments.
Pakistan, on the other hand, is affected both by the exogenous factors (higher international oil and food prices) and endogenous factors (political impasse). This has significantly weakened the local currency (down 19 percent so far in 2008) and forex reserves which are at 5-year low and covers less than 12 weeks of imports.
Moreover, Pak rupee is the world''s fourth worst performer, behind the Zimbabwean dollar, Turkmenistan manat and Icelandic korona. Interestingly, two smaller markets Sri Lanka and Bangladesh have emerged as the best performing markets so far in 2008 with a decline of only 6 percent and 10 percent in dollar terms, the report said.