According to Forbes, Pakistan’s equity markets continue to beat Chinese and Indian markets by a wide margin, unshaken by the rise in US interest rates. In the last twelve months, Global X MSCI MSCI +% Pakistan ETF was up 16%, beating Indian and Chinese comparable ETF’s, which were in negative territory for the year.
| Index/Fund | 12-month Performance |
| Global X MSCI Pakistan (NYSE:PAK) | 16% |
| IShares China (NYSE:FXI) | -1.5% |
| iShares S&P India 50 (NASDAQ:INDY) | -3.24% |
| iShares MSCI Emerging Markets (NYSE:EEM) | 1.10% |
Source: Finance.yahoo.com 11/23/2016
| Index/Fund | 12-month Performance |
| Global X MSCI Pakistan (NYSE:PAK) | 20% |
| IShares China | 9.80% |
| iShares S&P India 50 | 12.77% |
| iShares MSCI Emerging Markets
| 5.38% |
Source: Finance.yahoo.com 9/14/2016
That’s contrary to what one would have expected. India has become more competitive in the global economy recently, rising by 16 rankings in 2016 to the 39th position, while it is still at 122th position, near the bottom of the World Forum ranking.
| Country | 2016 | 2015 |
| India | 39 | 55 |
| China | 28 | 28 |
| Pakistan | 122 | 126 |
Source: World Competitiveness Index, World Economic Forum.
Pakistan has been lagging behind both India and China in key macroeconomic metrics like GDP growth rates and unemployment.
Pakistan’s, India’s and China’s Key Metrics
| Country | China | India | Pakistan |
| GDP | $10866 billion | 2074 billion | $270 billion |
| GDP Growth yoy | 6.7% | 7.1% | 4.24% |
| Unemployment | 4.05% | 4.9% | 5.9% |
| Inflation Rate | 1.3% | 5.05% | 3.56% |
| Capital flows | -594 HML | -$300 million | -$1882 million |
| Government Debt to GDP | 43.9% | 67.2% | 64.8% |
Still, there are a few good explanations for the Pakistan’s market lead over India and China.
Pakistan is a frontier market economy, while India and China are emerging market economies. This means that Pakistan’s economy is less exposed to the global economy than India and China. Thus, it is less vulnerable to interest rate fluctuations in developed countries, most notably in the US.
Then there’s the pouring in of Chinese investment, which is turning Pakistan into Beijing’s corridor to Middle East oil and to Africa’s riches.
Add to that a couple of overseas endorsements for Pakistan’s market reforms from overseas institutions that have been hyping investor expectations. Like $1 billion in support from the World Bank – and a couple of domestic acquisitions from foreign suitors like the acquisition of Karachi’s K-Karachi by Shanghai Electric Power Co.
While Pakistan’s market has been getting praise from overseas institutions and investors, India’s markets have been rattled by Modi’s experimentations with the country’s currency. Chinese markets have been unsettled by the return of heavy-handed government policies, which have scared away foreign investors.
