KARACHI, Sept 20: Pakistan would find it difficult to get strong response for its planned GDRs after the country was dropped out from ‘developed’ status of the Financial Times Stock Exchange Indexes on Thursday, said experts.

Pakistan was dropped from FTSE’s global indexes on the grounds “that it no longer meets the entry requirements.”

This is shocking for both the stock market and the planners, who are preparing to launch GDRs of some prominent companies of Pakistan.

However, bankers and analysts did not find the situation critical for launching of GDRs mainly because of high global liquidity created after unexpectedly high oil prices. The oil boom continues to create wealth, of which 50 per cent goes to United States and ultimately reaches global market for investment in the financial instruments.

Analysts found it difficult to assess the immediate impact but said that the decision would bring some impact on launching of GDRs.

Pakistan has planned to launch GDRs of National Bank of Pakistan, Habib Bank and Kapco during the current fiscal.

“I don’t expect big impact but the new GDRs from Pakistan may not get the enthusiastic response as it got in the case of MCB Bank and the United Bank,” said Mohammad Imran, research head at First Capital Research.

Most of the analysts said FTSE Indexes was not the benchmark. They prefer to consider Morgan Stanly (MSCI) as benchmark to calculate any impact or move in the financial market. An estimated $2 trillion to $2.5 trillion of funds track FTSE Indexes

Analysts consider excess global liquidity as one of the strongest factor in selling of GDRs. The global liquidity glut needs opening to penetrate in the economies, which could offer some return. It was a general consideration among the analysts that high global liquidity will not disappoint Pakistani GDRs.

The FTSE group reviews the status of countries each year and last year the group considered to drop Pakistan out from the developed status but was kept under watch. However, this consideration would not have any impact on Pakistan’s image abroad, which is obvious from the record foreign investment.

Analysts said the drop out of developed status would hurt Pakistan’s image but the global liquidity would mitigate the possible negative impact.

“I have two reasons which will defend any possible impact of FTSE group’s decision to oust Pakistan. First, FTSE is not the benchmark and second the surplus global liquidity seeks opportunity to invest,” said Atif Malik, senior analyst at JS Research.

He also pointed out that the decision to drop Pakistan out would be effective in June 2008, which provides sufficient time for launching of GDRs.

China was dropped from the FTSC last year but the result was reverse and the country received huge investment.