Foreign portfolio investment has increased substantially in 2012-13 and 2013-14 in tandem with a rising stock market. PHOTO: FILE
In a survey of approximately 200 global multinationals conducted exclusively for the US-based financial news source, advisory firm Frontier Strategy Group (FSG) found that Pakistan recorded a 5.6% improvement in the average rate of corporate sentiment in the last six months alone.
The FSG-created Frontier Markets Sentiment Index tracks the level of interest shown by major European and American multinational companies in countries across the frontier markets. Overall, Pakistan ranked 15th among 70 countries that constitute the global frontier market.
“Sentiment toward the South Asian nation of 183 million people improved by 5.6 percentage points, putting it ahead of Africa’s rising stars Nigeria and Kenya, which each saw sentiment improve by just over four percentage points,” the Journal said.
KASB Securities, a local brokerage affiliated with the Bank of America Merrill Lynch, believes the recent improvement in corporate sentiment among global multinationals bodes well for the increase in foreign direct investment (FDI) in 2014-15 and 2015-16.
Foreign portfolio investment (FPI) has increased substantially in 2012-13 and 2013-14 in tandem with a rising stock market. Growth in FDI, on the contrary, has been subdued with the country receiving only $750.9 million in July-April.
Pakistan has been a lucrative market for multinational companies for many years. According to the Economic Survey of Pakistan 2013-14, the combined after-tax profit of 15 big companies was Rs285.7 billion during the first 10 months of the outgoing fiscal year.
According to the Journal, corporate sentiment is calculated as the percentage of companies that include a particular country on their watch-list. “If 50 of the 200 companies are keeping an eye on a particular country, the sentiment index score would be 25%.”
Under the prevailing law, multinationals are allowed 100% repatriation of profit/dividend, a regulatory condition that makes Pakistan more foreign investor-friendly than many regional economies.
Total repatriation of profit/dividend in July-April amounted to $985.4 million, up 16.2% from the corresponding 10-month period of the preceding fiscal year.
The substantial improvement in the multinationals’ sentiment with regard to Pakistan’s economy is reflected in the economic and tax commentary by consultancy firm KPMG Taseer Hadi and Company following the presentation of fiscal budget 2014-15 earlier this month.
“The government’s determination to fix the economy was clearly visible from the beginning, and subsequent actions confirm the seriousness of this initiative. Significant milestones were achieved in July-April generally spurred by the commitments made to the IMF,” it said.
Published in The Express Tribune, June 10th, 2014.
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Pakistan has recorded the biggest positive sentiment change among all frontier markets in the last 12 months, according to the Wall Street Journal.
It is not a news until Gloomy Khan make it a news. To Mr. Khan, it must be a PML (N) conspiracy hatched by one of its think tanks! Has he been running the show then he would have done lot more than this. How, no one knows.
So far he and his team has kept all the marbles to themselves and hasn't shown any economic development miracles in KP. I guess it must be Punjab eccentric forces which are preventing him and his team to deliver there. Please, show your charisma beyond TV and jalsa as well.