A delegation from BMA, Pakistan's premier investment group, presented international investors with an analysis on Pakistan's economy and equity markets at the Trade Tech 2008 conference in Singapore earlier this month.
BMA made the case for international investors to keep Pakistan in their sights due to continued resilience in various sectors in Pakistan.
Farrukh Khan, Chief Executive, BMA Capital, took part in a debate at the conference entitled 'Emerging Markets: Opening up New Markets and promoting opportunities to foreign investors and asset managers", in which he stated: "Pakistan's stock market has been one of the best performing markets globally and still has a 12 percent CAGR over the last 5 years despite its recent downturn. This was driven in part by foreign investment but is largely attributable to domestic liquidity that led the KSE-1 00 Index market capitalisation to grow from US $5.8 billion in 2002 to US $75 billion during 2008. Concurrently, the average daily turnover of the index significantly improved from US $240 million to US $406 million during the same period."
Sarah Khan presented a case study on Pakistan which discussed the level of sophistication and automation in our equity markets vis-a-vis electronic trading, how the KSE is performing vs. the Pak economy, and reviewed the ongoing impact of political and economic challenges faced by Pakistan: "Pakistan has been hit by high commodity prices, particularly oil, which caused twin deficits to rise by unprecedented proportions in FY08. The nation's transition to democracy delayed a response to mounting economic challenges. Post commodity correction, we expect the import bill to reduce, easing pressure on our balance of payments.
Total investment to GDP has been around 22 percent over the last three years, and net foreign investment of US $5 billion during FY08 alone. While the US has been the biggest investor in Pakistan to date, we expect the Middle East and China to be the prime sources of Pakistan's future FDI. We expect Pakistan to attract US $3-4 billion of FDI over the next three years. BMA believes that it will take at least 4 to 6 quarters before we see any meaningful investment flows from foreign investors into Pakistan's equity market."-PR