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Karachi stock exchange -100 index,MSCI and Performance of Pakistan stock market

Pakistan stock market is  one of the best performing stock markets of last twelve months.According to the Forbes magazine its performance was even better than the markets of emerging economies like China and India.This is a very exciting news for the local and international stock investors. The average of Chinese markets is mostly attributed to the dodgy reform polices of the Chinese government.

Table 1

Index/Fund 12-month Performance 5-year Performance
Global X MSCI Pakistan (NYSE:PAK) 20% 400%*
IShares China (NYSE:FXI) 9.80% 16.00%
iShares S&P India 50 (NASDAQ:INDY) 12.77% 33.0%
iShares MSCI Emerging Markets  (NYSE:EEM)


5.38% 1.52%

The Table 1 shows that Pakistan ETF has performed very well as compared to the ETFs of emerging economies of India and China.Pakistan ETF ( Global X MSCI Pakistan) grew by 20% in last one year.The Indian ETF ( I Shares  S& P India 50 ) grew by 12.77 % and The Chinese ETF ( I Shares China) grew by 9.80 % in last 12 months.

The 5 -years performance of the Pakistan ETF is even better.Pakistan ETF grew by 400 % as compared to the 16 % and 33 % growth of Chinese and Indian ETFs respectively.This shows that Pakistan stock exchange has got a very good lead against these two emerging stock markets.

Karachi stock exchange -100 index measures the growth of the Pakistan stock market.This index consists of top 100 companies listed at the Pakistan stock exchange.These 100 companies have 90 % of the market capitalization of the whole stock market.Karachi stock exchange -100 index showed a very healthy growth in last few years.

Karachi stock exchange -100 index touched  16218 points on 7th November 2012 and that was highest point at time.It continued its upward movement since that day. Currently index is standing at 40340 points.Stock market index has showed growth of 148 % since November 2012.

According to the market experts,three are lots of reasons of encouraging growth of the Pakistan stock market.The inclusion of the Pakistan stock market in the MSCI emerging market index was one of the most important reasons for the growth of the Pakistan stock exchange.It has improved the reputation of the Pakistan stock market in the international arena.Karachi stock exchange -100 index rose from 38560 points to 40340 in last three months after the inclusion of the MSCI emerging market index.Pakistan has 0.19 % weight in the overall MSCI emerging markets index.China has the highest 25.41 % weight in that index.

Pakistani stock market offered very good returns to the investors as compared to the other regional stock markets since the year 2009.It offered more than 26 % annual returns to the investors.  delivered 26 percent a year for US dollar investors since 2009.It got the title of best frontier market of the world last year.

The low interest rates is another important reason for good performance of the stock market.Currently SBP is keeping the interest rates at lowest levels in last four decades. This policy has encouraged investors to pump more money in the Pakistan stock market.

The future of Pakistan stock market is very bright as market experts are expecting a huge investment in next few years.It is estimated that Pakistan will get 300-500 million foreign investment in next 12 months after the inclusion of the Pakistan in MSCI emerging market index.

About Emaad Qureshi