KARACHI, Sept 18 Global Index compiler FTSE has abandoned the thought of demoting Pakistan from secondary emerging market status to frontier market, a communiquÃ© received on Thursday said.
Analysts said that the FTSE offered benchmark indexes for pension funds, sovereign wealth funds and other fund managers. Those were classified in four categories Developed, advanced emerging, secondary emerging and frontier markets.
On Sept 12 two year ago, the FTSE had announced that it was placing Pakistan on 'watch list' for possible removal from the FTSE Global Equity Index Series (GEIS). Since the GEIS series is widely used by international institutional investors, the decision by the FTSE had caused some ripples among participants in the Pakistani equity markets.
Visibly pleased with the FTSE decision on Thursday, Mr Adnan Afridi, managing director at Karachi Stock Exchange comments “This reflects our commitment to capital market reform process and we will continue to strive to protect investor interest and help grow towards our ultimate objective of becoming a hub for capital formation in Pakistan.”
Giving further details, Mr S Munawar Ali, Manager Public Relations at the KSE, said that the bourse was engaged in consultations with the FTSE since early this year.
He said that the management had also visited FTSE in May and made a comprehensive case in favour of the country, which successfully convinced the FTSE group to keep Pakistan on their list of secondary emerging markets.
Analysts at Seoul, South Korea, from where the story originated told news agencies that the FTSE's announcement had come, as global financial markets were plunging due to mounting worries about the global credit crunch. That had sparked heavy foreign selling in emerging markets.
The Seoul analysts clarified that the FTSE's ratings were not in anyway influenced by the current global market conditions.
Analyst, Shujaat Baig following the equity market for a large stock brokerage firm in Karachi said that in better times, the FTSE decision could have sparked a bull run at the KSE. But due to the 'flooring' system, which had almost shut the exit and entry doors of the exchange, investors would only be 'spiritually' happy with the decision.
He, nonetheless, admitted that given the severe beating of stocks all across the globe, the 'flooring mechanism' put into place by the bourse on Aug 27, had come as a blessing in disguise.