Pakistan Downgraded to Frontier Market Status By UK-Based Rating Company

Pakistan has been downgraded to frontier market (FM) status from secondary emerging market by UK-headquartered FTSE Russell, reported Bloomberg. The decision, announced on Wednesday, comes into effect on September 23, 2024. The rating agency said Pakistan’s market did not meet the minimum securities count required to maintain its FM status. Despite this setback, optimism around the nation’s equities remains high. This year, PSX stocks have risen by over 30 percent, making them the best performers in Asia in US$ terms. Market experts opine that the FM downgrade was anticipated and had little impact on market sentiment. Investors remain hopeful that long-term IMF funding will stabilize the economy and help Pakistan overcome its economic challenges. The country first lost its emerging-market status with MSCI Inc. in 2021, just four years after it was upgraded, due to its shrinking market size and liquidity. FTSE Russell had placed Pakistan on its watch list for a possible downgrade to frontier market status in its September review, citing a steady decrease in its index weight and its “minimum investable market capitalization” falling below the required level.