Former pariahs in emerging markets have been among the world’s best-performing stock markets this year as investors bet reforms in troubled economies such as Argentina and Pakistan will help them leave the worst of their currency woes behind them.
Even so, foreign flows into Pakistan’s stocks remain minimal and the turnaround is instead a reaction to a drop in food and fuel inflation, which spiked after Russia’s invasion of Ukraine, said Dominic Bokor-Ingram, a senior portfolio manager in emerging and frontier markets at Fiera Capital. “We don’t see it as a reform story but as a bounce back from very low levels,” he said.