Issue Brief on “CPEC and Pakistan’s Stock Market”

The performance of Pakistani stock market has been exceptional in the last year. Improvement in security situation and the launch of development projects under the China Pakistan Economic Corridor (CPEC) have been identified as the key factors behind growing investor confidence. In June 2016, MCSI, a leading provider for insights and investment decision tools, announced that it would classify Pakistan in the Emerging Market Index. At the time of this announcement, the Pakistan Stock Exchange had risen by 15% in 2016 which made it a leading performer in Asia.

This announcement was warmly welcomed by government officials and financial experts. For the government, it served as a recognition for its efforts in making Pakistan an attractive market for local and foreign investors. The bullish trend in the Pakistani markets has continued from there on and is likely to persist, given the fact that security and political risks have been decreasing while work on CPEC related projects has gained momentum. More foreign inflows are expected in 2017 once the Pakistan Stock Exchange is actually listed in MCSI Emerging Market Index in 2017.

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