Investors wary

There is one caveat which one must keep in mind while trying to fathom the trends in Pakistani stock markets

Equities the world over do react to all kinds of significant domestic and international changes. In recent days, drastic upheavals were observed in world stock markets, including in Pakistan, as results of the US presidential elections started coming in. And in reaction to what is called the biggest upset outcome of US presidential contest the equities in most major countries in the world almost crashed only to regain within 24 hours. Pakistani stocks also showed almost similar trends. Now the hearing of Panama Papers case by the Supreme Court of Pakistan is having almost similar impact on the country’s stock because the fate of the current government in Pakistan is being seen by many to be crucially linked to the way the case would finally go. This week as well investors in the stock market remained wary as the Panama Papers case involving the family of the prime minister continued to hang in the balance.

On the face of it the hearing of the case appears to be dragging on for a couple of weeks’ more contrary to early speculation of reaching its logical end within days in the Superior Court itself without the need for setting up of a judicial commission headed by one of the Supreme Court judges. So, Pakistan stock markets are also expected to fluctuate in accordance with the way the case would go on a particular day. But regardless of how the case would end finally the stock market would regain its normal ups and down in a matter of days because that is how equities the world over respond to such events. There is, however, one caveat which one must keep in mind while trying to fathom the trends in Pakistani stock markets. Except for half a dozen or so equities linked to major industrial and commercial groups most other equities react to market exploitation by the big market players. In fact Pakistan stock market’s ups and down do not reflect the actual state of affairs in the national economy. Most of the changes in the equities’ worth are brought about by the speculators to sell and purchase shares mainly to make some quick profits.

Published in The Express Tribune, November 20^th, 2016.

Like Opinion & Editorial on Facebook, follow @ETOpEd on Twitter to receive all updates on all our daily pieces.