Traders at the Karachi Stock Exchange.
European Pressphoto Agency
China’s launch on Monday of a massive infrastructure-spending plan in Pakistan has brought considerable attention to the South Asian frontier market. Chinese President Xi Jinping announced and launched a $28 billion package of infrastructure deals that will form part of the so-called China Pakistan Economic Corridor.
Last weekend, Pakistan’s Planning Minister Ahsan Iqbal said the total Chinese investment into Pakistan would reach $46 billion.
Much of the spending will focus on power and transportation and is expected to boost Pakistan’s already-burgeoning economy. The announcement is also helping the country’s stock market to recover from a slump that saw the MSCI Pakistan index fall by more than a fifth in dollar terms over the two months to the end of March.
China’s colossal investment plan is not the only potentially market-moving news for Pakistan this week. Investment Bank Renaissance Capital yesterday described the country as an “undervalued reform story”, noting that the government is living up to its privatization promises—including its recent record-breaking sale of its stake in private sector banking giant HBL—and delivering reforms that should enhance stock valuations.
Against this backdrop, the timing of the launch of the first Pakistan-focused exchange-traded fund in the U.S. is remarkably fortuitous. U.S.-based ETF provider Global-X is launching the ETF tomorrow on the New York Stock Exchange.
The fund joins a growing list of single-country frontier-market ETFs, including Global-X’s Argentina and Nigeria funds, as well as Market Vectors’ Vietnam fund. Jay Jacobs, research analyst at Global X Funds, says: “With the launch of the … Pakistan ETF, investors now have access to one of the largest, most liquid frontier-market countries.”
Write to Dan Keeler at