The Karachi Stock Exchange (KSE)-100 index fell another 222 points on August 19, settling at 28,630.12 points as political uncertainty continued to dominate investors’ judgment. The equity market has been in a restrained mode ever since Imran Khan-led PTI and Tahirul Qadri’s PAT have announced sit-ins in Islamabad with the 1,309-point fall on August 11 being the highest in history in terms of points. The ongoing protests accompanied by Imran’s calls for civil disobedience — asking the public not to pay utility bills or taxes — have not sat down well with the business community either, which has shown its displeasure over the hindrances faced due to the long march. In addition, the International Monetary Fund’s (IMF) directive to increase power tariffs and its insistence on implementing it before its executive board meeting caused the talks between the government and the global lender to remain deadlocked. It led to the fourth review of the $6.7 billion bailout programme being put on hold although both parties resolved to reach a conclusion within the next few days.
The rupee also depreciated to Rs100.4 a dollar, while foreign direct investment also clocked in at just $24 million in the first month of the current fiscal year, a decrease of almost 80 per cent year-on-year. The wagons have begun to circle and the PML-N government — known for its pro-business policies — will now have to settle the dispute with the PAT and the PTI before reaching out to the business community and promise it of favourable conditions. The IMF will also have to be given some assurances if Pakistan wants the next tranche of the bailout programme. But the government’s work is cut out. The IMF will not settle for anything less than an increase in the power tariffs and the last thing PML-N can do is drop another ‘price bomb’ on the general public.
Investors are clearly not pleased with the developments in the capital and continue to express it at the bourse. The KSE-100 index has also bore the brunt of panic and jitter, recovering only when institutions have stepped in or the prime minister has addressed the nation. These are tough times for the PML-N and the protests need to stop for the investment-friendly weather to return. Otherwise, we are looking at a continuous panic-mode KSE.
Published in The Express Tribune, August 21st, 2014.
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