KARACHI: Global fund managers are giving a hard look at the Pakistan Stock Exchange (PSX) as it prepares to be upgraded to MSCI Emerging Markets (EM). Although the decision in favour of PSX would be music to everyone’s ears, no one would be quite sure until the decision is announced on June 14.
Yet, the front-line regulator and major local asset investment houses have started to trot the globe to convince world’s top foreign funds of the great opportunity that the inexpensive PSX stocks, providing high yield, presents themselves.
The big question ahead is: How much of an inflow does the Pakistani equity market expect? The estimates range between $300 million to $500m.
Managing Director PSX, Nadeem Naqvi who is in London to attend the ‘Renaissance Capital Investment Conference’, said on Monday that he would be happy with $200m to $250m as the initial arbitragers position themselves for the index flows.
He drew analogy with Qatar and United Arab Emirates who received around $400m within 6-8 months of their entry into the EM. Others have been pushing their own estimates. Credit Suisse, one of the world’s three top global investors, a while ago espoused sum of $250m to $300m entering the Pakistan market, while Egyptian Financial Group (EFG) Hermes estimated inflow of $475m to $500m following PSX reclassification to MSCI EM.
Zubair Ghulam Hussain, CEO at Insight Securities (Pvt) Ltd concurred saying that since EFG Hermes was the biggest Middle Eastern broker, the receipt of foreign flows by Qatar and UAE markets could be the right gauge.
Between $300m to $350m should be a reasonable number, he opined.
Reports reaching here from London suggested foreign fund managers’ interest at the JS Global’s two-day ‘Pakistan Investment Conference 2016’. “Fund managers representing as much as 20 per cent (about $15 trillion) of world’s assets under management were present at the conference on the first day,” said Khurram Schehzad, a senior official of the group, in attendance at the conference.
Meanwhile, Nasim Beg, Vice Chairman MCB-Arif Habib Savings informed that the Arif Habib Group’s representatives had met fund managers of giant global funds such as Vanguard, Lazard, Morgan Stanley Investment Management in New York, last week. He said that the response was warm and enthusiastic.
PSX Chairman Muneer Kamal tried to assuage the global fund managers’ greatest fear of another infamous ‘floor’ in future that might close down the market as happened in 2008. Mr Beg said that he believed that Pakistan could attract 0.2pc of the MSCI index investment of $1tr in Emerging Markets.