Pakistan's ‘Emerging Market’ status: What comes next?
Dilawar Hussain, DAWN, May 22, 2017 When they wish to invest, fund managers across the globe look at the Morgan Stanley Composite Index. Since the index is widely recognised as the leading provider of investment decision support tools worldwide, capital markets must conform to its standards. Pakistan was part of the MSCI Emerging Market (EM) Index from 1994 to 2007. But during the stock market crash of 2008, panicked regulators and stockbrokers decided to close the exit door for foreign investors. In effect, it trapped foreign portfolio investors in the country. When the dust finally settled, beleaguered foreign funds marched out of Pakistan and MSCI demoted the Pakistan MSCI Index from ‘Emerging Market’ to ‘Frontier Market (FM)’. The country’s equity market thus lost its access to the trillions of dollars that EM fund managers track. The FM market, on the other hand is a club of smaller markets with just a few billion dollars to invest that barely manages to draw the int...