KARACHI: Pakistan stocks hit a record closing high on Wednesday, after the country’s stock market was upgraded overnight and included in the MSCI’s emerging market index.
The benchmark 100-share index of the Pakistan Stock Exchange closed up 1,042.12 points, or 2.78 percent higher at 38,559.87, a record high close.
It was also the index’s biggest single-day percentage gain since March 31, 2015 when it rose 4.5 percent.
“MSCI announced its annual market classification earlier today and upgraded Pakistan from the Frontier to the Emerging Market Index, which led the local index to storm past its previous high and set a new level,” said Hammad Aman, Manager, Equity Sales at Topline Securities (Pvt) Ltd.
Volumes were up 70 percent to 243 million shares, while traded value increased by a staggering 100 percent to 19 billion rupees ($181.73 million).
Pakistani brokerages upgraded their outlook on the market and said the main index was now likely to rise above 40,000 by year-end.
“Pakistan’s market multiple is lower than the emerging market multiple, so there will most likely be a re-rating of the Pakistan market in the short term,” said Saad Hashmey, chief economist and director of research at Topline Securities.
“It might not be as high as the emerging market, but there will be plenty of upside,” he added.
Habib Bank was up 3.4 percent, while Oil and Gas Development Company jumped 2.95 percent.
Research firms estimate the MSCI upgrade will result in about $400 million in inflows into Pakistan’s stock market by passive tracker funds alone.
The stock exchange was dropped from the MSCI Emerging Markets Index when it imposed a floor on the market during the financial crisis in 2008, effectively trapping local and foreign investors for several months.
Over the past few years officials have been enacting a host of market reforms to regain the trust of investors, including demutualising Pakistan’s bourses to weaken the influence of stockbrokers and deepen the investor base. –Reuters