KARACHI: Pakistan’s stock market witnessed a bullish trend on Friday as 15 locally listed companies were added to the Frontier Markets (FM) Index maintained by Morgan Stanley Capital International (MSCI), a globally renowned provider of investment decision support tools and data.

Frontier markets are smaller economies with less developed financial markets and lower levels of liquidity compared to emerging markets.

The inclusion of Pakistani companies in the index is significant since it reflects growing investor confidence and highlights the potential for higher returns.

The Pakistani stock market responded positively to the development, with the benchmark KSE100 index rising to 48,898.82 points during intraday trading before settling at 48,409.48 by the end of the day. Overall, Pakistani stocks gained 619.03 points, amounting to a rise of 1.28 percent.

“The positive momentum in market is due to the MSCI quarterly review results which increased Pakistan weightage from 0.6 percent to 2.6 percent,” Ali Nawaz, chief executive officer of Chase Securities, told Arab News. “We can see foreign inflows returning to Pakistan’s equity markets on the back of increased weightage in the MSCI Frontier Market Index.”

Earlier, Shahid Ali Habib, an investment banker at Arif Habib Limited, described the inclusion of over a dozen Pakistani companies as “the highest increase amongst all the #MSCi #FM countries” in a social media post.

“15 stocks are now added making the total to 17 stocks in the index,” he said while sharing the list of the companies. “Earlier only 2 stocks OGDC and ENGRO were part of index, now total 17 stocks.”

Pakistan faced significant economic challenges in the past couple of years while seeking external financial assistance from friendly nations and international lenders like the International Monetary Fund (IMF).

The outgoing government of the country managed to secure a $3 billion IMF bailout package in recent months after extensive negotiations.

While Pakistan’s national economy is not yet completely stabilized, its increasing weight in the FM Index is likely to attract foreign entrepreneurs to consider investing in the country’s future.

“The changes to MSCI Frontier Market Index will be effective from August 31, 2023,” Muhammad Sohail, CEO of Topline Securities, said. “The interest of foreign participants is back in Pakistan. In the last six weeks, foreign corporates have done a net buying of $27 million.”