Bullish bourse

There are signs of stability on the economic front. Macroeconomic indicators are showing improvement. Exports in the July-November period of FY20, the ongoing fiscal year, have jumped 4.8 per cent while imports have fallen 19.3 per cent, thereby cutting the trade deficit by nearly 35 per cent — to $9.5 billion. Growing foreign interest in the treasury bills has also been witnessed of late, with the volume of investment jumping to $1 billion in the first five months of FY20. American credit rating agency Moody’s has also upgraded Pakistan’s credit rating outlook to stable from negative while expecting the balance of payments dynamics to improve at the back of policy adjustments and currency flexibility.

All this appears enough for stock market investors to feel good — at least for now. The benchmark KSE index has, thus, taken a good U-turn. The index rose by 1,780 points over the last week and gained another 836 points on Monday to cross the 40,000 mark after a period of nine months, closing at 40,124 points. It was on May 25, 2017 that the index had hit its peak of 53,124 points, but ever since, it kept plummeting mainly because of the political uncertainty that gripped the country in the wake of Nawaz Sharif’s removal as prime minister over corruption allegations. The erosion at the bourse continued, as even the general election in July 2018 failed to bring the political calm needed for the economy to prosper. There did come a time when in mid-August this year, the index had fallen below the 29,000 mark, hitting a four-year low. But the last three months or so have turned out to be good for the bourse during which the index has winged past the 40,000-point psychological barrier.

The stock market is not regarded as a true barometer of the economy in view of its manipulative vulnerabilities. However, it does serve as some kind of a report card on the country’s financial health and the performance of the government’s economic managers. The latest rally at the stock market deserves to be acknowledged as a sign of the revival of investors’ confidence in the government’s economic policies. 

Published in The Express Tribune, December 4^th, 2019.

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