Advisor to Finance Minister, Khurram Schehzad on Tuesday urged the Pakistan Stock Exchange (PSX) and Securities Exchange Commission of Pakistan (SECP) to develop a roadmap aimed at increasing Pakistan’s weight within the MSCI Frontier Markets (FM) Index.
This should ultimately lead to Pakistan’s inclusion in the MSCI Emerging Markets Index, said Schehzad during his visit to the PSX, to discuss strategies for enhancing the depth and performance of the capital market, read a press release issued by the PSX.
In September 2021, Pakistan was downgraded from its status as an emerging market, a little over four years after it was reclassified from the FM Index by MSCI.
The MSCI had said then that while the Pakistani equity market meets the requirements for market accessibility under the classification framework for Emerging Markets, it no longer meets the standards for size and liquidity.
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Meanwhile, during the meeting, Schehzad received a comprehensive overview of PSX’s strategic initiatives.
Farrukh Sabzwari, CEO of PSX, emphasized that, despite challenges, Pakistan’s capital markets possess immense potential. He expressed confidence that through a well-formulated strategy, PSX could realize this potential and significantly contribute to the economy.
Meanwhile, Schehzad reaffirmed the government’s commitment to supporting capital market growth, recognizing its role in stabilising as well as underpinning growth in the country’s economy.
As per the statement, Schehzad urged the PSX management to formalize recommendations for structural changes and privatization of State-Owned Enterprises (SOEs), which could advance governmental goals and boost market capitalization.
The advisor also recommended rebranding and repositioning the GEM board to function as a platform for venture capital and startup fundraising.
Moreover, key initiatives were also discussed including taking steps for high-value listings to increase market capitalization and attract foreign investment.
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An ambitious target was also discussed to increase the investor base to 2% of the national population within three years.
Schehzad endorsed the recommendation to form a formal committee comprising PSX, SECP, and the State Bank of Pakistan (SBP) to leverage each entity’s strengths.
He said that collaboration with Chinese capital markets is critical to facilitate cross-border investment opportunities, broaden market access, and stimulate investor participation.