CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Between 54-87% of retail CFD accounts lose money. Based on 69 brokers who display this data. *Availability subject to regulation.
Pakistan’s primary stock market is the Pakistan Stock Exchange (PSX), which was formed by a merger between the Karachi, Lahore, and Islamabad stock exchanges in 2016. The PSX aims to provide an efficient, reliable and consistent marketplace for its listed Pakistani securities, with the exchange listing equities, derivatives, exchange traded funds (ETFs) and fixed income products relevant to Pakistan.
The main stock index for the PSX is the KSE-100, with KSE standing for the Karachi Stock Exchange. This capitalisation-weighted headline index includes the biggest companies listed on the PSX by market cap within their sectors and represents 85 percent of the exchange’s total market capitalisation.
Morgan Stanley Capital International (MSCI) classifies the PSX as an Emerging Market as of May 2017, although the FTSE still classifies the exchange as a Secondary Emerging Market. This news created considerable buying interest in blue chip PSX stocks that pushed the benchmark KSE-100 index to a new high close in late May 2017, although the market has since declined correctively.
Forex traders may recognise the Pakistani rupee (PKR) as Pakistan’s national currency. The PKR is not a common reserve currency among central banks, according to the International Monetary Fund (IMF), nor was it ranked among the top 35 most traded currencies by the Bank for International Settlements (BIS). The rupee’s value was pegged to the British Pound until 1982 but was then allowed to float to find its market price. The State Bank of Pakistan manages the value of the currency and maintains an orderly market in it.
Trade factors that influence Pakistan’s financial markets include the price of key strategic commodities imported by the country, while Pakistan’s current GDP ratio could potentially make the country less vulnerable to trade issues and economic weakness among its key trading partners. In addition, while they do not directly affect imports from Pakistan, the imposition of trade tariffs and the resulting trade war between the United States and China could, according to local reports, possibly have a positive impact on the country overall.
Financial regulation in Pakistan for online forex and contract for difference (CFD) brokers falls under the auspices of the Securities and Exchange Commission of Pakistan (SECP). This regulatory organisation has the responsibility for enforcing financial laws and overseeing Pakistan’s capital markets, including non-bank finance companies, brokers and insurance companies.
When looking for an online broker to trade forex or CFDs with, make sure to choose a well-regulated broker that has a strong reputation with clients. Online brokers generally offer several trading accounts for traders, including:
With respect to trading stocks, the Pakistan Stock Exchange (PSE) provides trades in Pakistani stocks, fixed income products, derivatives and exchange-traded funds (ETFs), including Islamic products. Exchange transactions are largely executed in Pakistani rupees.
Trades and orders are entered into the PSE’s electronic trading systems known as KATS, KITS and BATS. The Karachi Automated Trading System (KATS) facilitates trading for stock brokers, the Karachi Internet Trading System (KITS) is used for online trading, and the Bonds Automated Trading System (BATS) provides a trading platform for corporate and government debt instruments.
According to Gov.uk, Pakistan has a rather favourable geographical position located “on the crossroads of Asia and the Middle East”. Pakistan is also the second largest South Asian economy, which can result in possible trading opportunities.
International trade remains quite important to Pakistan as a signatory to the South Asia Free Trade Agreement, with the World Bank reporting that imports and exports of goods and services by the country equated to roughly 25% of GDP as of 2017.
Furthermore, China and the United States remain two of Pakistan’s largest trading partners, and any strain in the relationship between these neighbours, such as an escalating trade war, could reportedly provide opportunities for Pakistan’s economy as the United States turns to importing goods from Pakistan and China moves manufacturing to Pakistan to avoid U.S. tariffs.
Pakistan also has a growing financial services sector that caters to Muslims and provides Sharia law compliant investment products and accounts.
Furthermore, Pakistan was ranked 26th for protecting minority investors by the World Bank, and the country ranked 53rd for resolving insolvencies, so the country’s legal system does apparently take care of investors and those owed debts by bankrupt companies.
As a consistent net importer with a moderate trade-to-GDP ratio of around 25% in 2017, Pakistan’s economy can suffer from the failure of major trade agreements. The economy is also especially susceptible to rising oil prices as a net importer.
Furthermore, the overall forecast for growth in Pakistan was slashed by the World Bank in January 2019, according to a report by Business Insider. The forecast was cut largely due to concerns about growing trade tensions, soft manufacturing activity and increasing financial stress among emerging markets.
The State Bank of Pakistan, the Pakistani central bank, sometimes intervenes in the currency market and with interest rate changes to stabilise the USD/PKR exchange rate, which has been depreciating in recent years. Intervention can cause sharp currency valuation shifts resulting in foreign exchange uncertainty for traders, while currency depreciation can affect businesses looking for a more stable currency environment to operate in.
When it comes to starting a business, the World Bank ranked Pakistan 130th compared to other countries, and the country ranked at 136th as an easy place to do business overall.
The country was also only in 112th place for obtaining credit, 142nd for trading across borders, 156th for enforcing contracts and 173rd for paying taxes. These low ranks indicate a possibly challenging environment for operating within the country’s financial market
Overall, while traders and businesses may find Pakistan a challenging country to operate in for numerous reasons, some opportunities do exist in this emerging economy. Furthermore, Muslim traders may find Pakistan a relatively good place to open Sharia law compliant accounts and trade Islamic financial products.
When searching for a broker to operate through in Pakistan, traders should check to see that they offer a suitable range of asset classes, a decent trading platform, strong regulation and adequate financial security for a margin deposit.
Forex.com scored best in our review of the top brokers for pakistan , which takes into account 120+ factors across eight categories. Here are some areas where Forex.com scored highly in:
Forex.com offers one way to tradeForex . If you wanted to trade EURUSD
The two most important categories in our rating system are the cost of trading and the broker’s trust score. To calculate a broker’s trust score, we take into account a range of factors, including their regulation history, years in business, liquidity provider etc.
Forex.com have a AAA trust score . This is largely down to them being regulated by Financial Conduct Authority, segregating client funds, being segregating client funds, being established for over 19
Want to see how Forex.com stacks up against ThinkMarkets? We’ve compared their spreads, features, and key information below.
|USD/JPY Spread||0.90||0.10||DAX Spread||250.0|
|FTSE 100 Spread||150.0|
|Platform||MT4, Web Trader, NinjaTrader, Tablet & Mobile apps||MT4, Mac, Web Trader, Tablet & Mobile apps|
|Base currency options||USD, GBP, EUR||USD, GBP, EUR, CHF, JPY, SGD, AUD, CAD, NZD, CNH|
|Funding options||Bank transfer, Cheque, DebitCard,||Payoneer, Credit cards, Bank transfer, Neteller, BPAY, UnionPay, FasaPay, DebitCard,|