World’s largest financial institution ‘JPMorgan’ recommends its international clients to invest in Pakistani govt bonds

The world’s largest financial institution, JPMorgan, has issued a research report recommending that its clients must invest in Pakistani government bonds, unhedged for currency risk.


The world’s largest financial institution, JPMorgan, has released a research report recommending that its clients must invest in Pakistani government bonds, unhedged for currency risk.

Six Million T-bills

“We suggest purchasing 6m T-bills at an indicative yield of 13.1% on an FX-unhedged basis,” wrote Saad Siddiqui and Milo Gunasinghe, two research experts who work at JPMorgan’s emerging markets headquarters in London, in a more extensive research report circulated to the bank’s customers on January 17, 2020.

JPMorgan points to a few positive indications that have increased the interest of foreign investors. First, there has been a stable improvement in the IMF program, which has ‘engendered macro-stability and injected a dose of confidence to the markets.’

According to the report, “The IMF program is off to a reasonably solid start, with Pakistan outperforming on the market-critical program Performance Criteria relating to net FX reserve accumulation and the primary fiscal deficit.”

Significant adjustment in the currency according to the report:

USD/PKRMoved from 105 to 154.5 since mid-17
C/A DeficitUS$6.6bn in 2019/2020, from US$20bn in 2017/18
 Imports continue to fall


According to the research experts, “a widening of the current account deficit is unlikely to happen, as growth remains constricted due to a tight fiscal and monetary policy.”


Additionally, JP Morgan believes that the central bank is unlikely to cut the current interest rate of 13.25% anytime soon. 

Even though many in Pakistan believe that the SBP will cut the interest rate, with speculation of when ranging from anytime between end-January to early March. The current interest rate has remained stubbornly at 13.25% since July 16, 2019. 

Still, as far as JP Morgan is concerned, the current interest rate maintains the carrying support for the currency, while fiscal policy is constrained by the IMF program. “These factors alone should keep the currency well-supported in coming months, and enable investors to realize most of the carry on offer.”

GDP Growth

According to the experts of JP Morgan, “GDP growth in Pakistan will remain anemic in the fiscal year 2020 and 2021. The report forecasts GDP growth at 2.7% in FY20, and 3.3% in FY21. (For comparison, Fitch Ratings recently predicted GDP growth at 2.8% in FY20, and 3.4% by FY21). 

What Are Your Views On This? Share in The Comments Bar Below. 


  • Govt on Imran Khan is taking very concrete measures to rectify the massive and phenomenal blunders that it inherited.
    Good to see that we made the right choice.

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