Given the recent beginnings of the economic recovery in Pakistan, what can investors in the equity markets expect as far as returns over the next two years or so? If the analysts at JS Global Capital, a leading investment bank, are to be believed, returns might approach close to 50% over the next two years.
JS Global’s recently released Pakistan Market Strategy is so optimistic, that the reader could be forgiven for thinking that perhaps the analysts are letting the animal spirits get the better of them. The report is not only practically joyous in its outlook, but also grandiose. Consider the opening sentences:
“What is to stop the equity market from reaching out for the stars once the dust settles? The quintessential behaviour of Pakistan’s equity market has time and again exceeded the wildest expectations of those who have dared to dream! So why not take this opportunity to pluck the fruit while it is still ripe?”
The hyperbole notwithstanding, the report is interesting for a few reasons. For one, it claims that the preceding two IMF programs had been checkpoints for Pakistan equities. “The bottom that the market has made post IMF-entry has not been revisited.” the report says.