Suffering from all sorts of terrorists attacks and the political instability, Pakistan is considered an unstable country to put your money in. It has long been lagging behind both India and China in major macroeconomics metrics including GDP rates and unemployment. But in recent years, some changes have come as a big surprise to some.
Pakistan’s equity market has outperformed Asian markets with a bigger margin already. But now researchers are admitting that Pakistan has out shined in one other aspect i.e. the economic freedom ranking. According to the recent Index of Economic Freedom ranking of 2017, Pakistan has been placed on 141st spot leaving India at 143th position.
The Economic Freedom report published by the Heritage Foundation measures all such things as trade freedom, business freedom, venture freedom, and degree of property rights protection in 186 states. For some this might be just a small gap between the two countries but still Pakistan is still ahead in recent years.
For equity market investors, this is really a good situation. It is because gains in the economic freedom ranking are mainly linked with better economic growth rates as well as higher equity markets. Pakistan’s better performance is a reflection of suitable market conditions in the country.
Global X Pakistan (PAK)
iShares S&P India 50 (INDY)
Source: Finance.yahoo.com 2/27/17
Pakistan is far better than India in the sectors of business development and government spending. This makes a huge difference in the financial market performance.
The reason behind this upsurge is mainly because Pakistan has started following reforms that improve the overall entrepreneurial environment. Such environment is also helpful in facilitating private sector development. This is actually helping for restructuring of the whole economic sector. For future of a country, this certainly is good news.