(Bloomberg) -- Stocks in Pakistan closed near their record high on Thursday as robust foreign inflows and improving macro-economic indicators boosted sentiment.
Pakistan Stock Exchange’s benchmark KSE-100 index gained 1.1% to close just shy of the previous record of 81,865.10, after touching a new high earlier in the day. The gauge has risen more than 30% this year, aided by foreign investors’ net purchases of $87 million in local shares, the highest since 2014, data compiled by Bloomberg showed.
Pakistan’s stock market has been one of the best performers globally this year, buoyed by improving economic outlook and a crucial initial loan deal with the International Monetary Fund in July. In recent months, the nation’s current account balance has improved, and the central bank has slashed interest rates as inflation is easing.
That said, the rally faces risks going forward. Pakistan was downgraded to a frontier market status from secondary emerging market by FTSE Russell in July, with the decision coming into effect from Sept. 23.
Vanguard Group Inc., which provides investment management and advisory services, is cumulatively holding as much as $160 million worth of Pakistan stocks, and is expected to trim holdings ahead of the new status, Topline Securities Ltd. said in a note this week.
For some market watchers, the stocks still have more room to run, driven by fertilizer and energy shares.
Pakistan is still “very cheap for foreign investors” and those investments will continue, more so after the interest-rate cut by the Federal Reserve, said Aqeel Karim Dhedhi, chairman at the AKD Group that includes one of the nation’s largest brokerage houses.
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