The bearish bourse

Published: August 8, 2019
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Already hit by the ongoing political and economic uncertainty in the country, the Pakistan Stock Exchange too is now feeling the heat of geopolitics.

Bears dominated the bourse for a fifth successive session on Wednesday as the benchmark KSE-100 index slimmed down by another 723.22 points amid escalating tensions between Pakistan and India over the Kashmir dispute. At 30,277.45, the index has crashed down the 31 thousand psychological barrier.

The bourse had its last respite on Wednesday (previous week) when the index had gained 280 points. Thereafter, it’s just fall and fall — 99 points on Thursday, 172.7 on Friday, 485.61 on Monday, 180 on Tuesday, and 723.22 on Wednesday. The accumulative fall comes to a mammoth 1,660 points or 5.2 per cent, meaning a drop of Rs260.86 billion in market capitalisation.

It was on May 25, 2017 that the index had hit its peak of 53,124 points, but ever since, it has plummeted by 18,2014 points, or 34 per cent, wiping off more than a third of the investors’ savings. The market capitalisation of the stock exchange has eroded more than Rs3.25 trillion.

The factors affecting the bourse all these months — nearly 26 in all — are aplenty. To start with, the government’s economic policies are all mired in confusion, which is evident from a noticeable fall in economic growth rate, uncertain exchange rate, added debt burden, lack of a clear-cut policy on sick enterprises, cluelessness over tackling circular debt, traders’ opposition to the imposed taxes, etc.

To add to that, there has been growing political uncertainty emanating from the arrest of opposition leaders, mainly on corruption charges; a near-halt of legislation business in parliament; and of late, a tug of war between the government and the opposition on the no-trust vote in the Senate.

International pressures, like those concerning potential blacklisting by the FATF, are also playing their part. As if all that was not enough, Modi’s unconstitutional annexation of occupied Kashmir is now taking its toll on the stock exchange.

If not all, many of the factors mentioned above can be addressed by the government. The sooner the government moves to arrest the unprecedented fall, the better.

Published in The Express Tribune, August 8th, 2019.

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