Pakistan, despite facing multiple negatives, does have the best-performing equity market in the region after Indonesia, shows the Morgan Stanley Capital International (MSCI) performance indices.
According to Asian Frontier Markets (AFMs) and Asian Emerging Markets (AEMs) indices of the MSCI, Pakistan equity market stands second after that of Indonesia with its negative year-to-date (YTD) return of 4 per cent. YTD describes the period beginning from 1st January of the current year up to today’s date.
Indonesia is the country where the YTD return is the lowest and positive at 3 per cent, followed by Philippines having a minus 5 per cent YTD return.
“Interestingly, Pakistan, despite security concerns, tense Pak-US relationship and economic slowdown is so far the best-performing market in Asia after Indonesia,” viewed Farhan Mahmood of Topline Securities, citing the MSCI indices.
The analyst said Pakistan was a country, falling under the category of AFMs, where positives like over 20 per cent growth in the corporate earnings and recent 150 basis points cut in the interest rates had helped the equities stand, so far in 2011, tall amongst the AFMs and AEMs.
The MSCI indices show Malaysian market securing fourth position with minus 7 per cent YDT return, followed by Thailand with minus 11 per cent, South Korea with minus 13 per cent, Sri Lanka with minus 15 per cent, China and Taiwan minus 20 per cent, India minus 26 per cent, Vietnam minus 27 per cent and Bangladesh minus 37 per cent.
Farhan said with the resurgence of US crisis coupled with headwinds in the eurozone, huge selling was seen on the global equity markets as the risk-averse offshore investors moved to the safe heavens. “The MSCI All Country World Index has slumped by 8 per cent in 2011 till October 18 on concerns about the world economy and the lack of any credible solution to Europe’s debt issue,” he said.
The repercussions, according to analyst, were also felt in the Asian markets which saw net outflow during the last few months which kept markets under pressures.
“That is why most of the Asian Emerging and Frontier markets have posted negative returns so far in calendar year 2011,” he said.
He added that, “For the sake of consistent index calculation methodology and to calculate return in US dollars, we have used MSCI indices rather than (the) country’s own index.”
Farhan said due to fear of another recession, the benchmark MSCI World Index was down 8 per cent in 2011YTD. A sharp decline was witnessed in the Emerging and Frontier markets with MSCI Asian EM and FM indices both sliding by 18 per cent and 25 per cent, respectively.
Moreover, except for one market in 12, all markets in MSCI indices were down by 5 to 39 per cent with India and China, the two leading markets falling by 26 per cent and 24 per cent, respectively.
“Interestingly, Pakistan with negative 4 per cent return is so far the second best performing market amongst these 12 countries, including 4 in MSCI FM and 8 in MSCI EM,” the analyst said adding, however, that amongst the four MSCI AFMs, Pakistan had outperformed all other markets with a big margin.
MSCI is a global index designed to measure performances of the world’s equity markets.
