Financial markets primarily reflect investor sentiment, which makes Pakistani equities’ Feb rally all the more impressive. All the while primary political institutions have been locked in existential paralysis, local equity markets have been slowly undoing three years of stagnation, finally returning to the region’s top five list. Ordinarily, you wouldn’t expect local investors bidding the market enough to attract foreign participation in times of multiple crises. But the fact that it happened underlines the resilience of the local burse, besides indicating what can be done in better circumstances and under more capable management.
Breaching the 13,000 mark will attract yet more foreign investment, so the progressive cycle is already well underway. In addition to unlocking investor funds shy of market uncertainty, swelling stock prices will also provide pundits more capital for primary businesses, expanding the overall economy. Relevant authorities must now ensure this buoyancy is not compromised. It will take a long time to re-inflate the market should pundits declare inflows unsustainable. Which s why it is important to settle the CGT issue amicably. No doubt authorities are mindful of the importance investors are associating with it, so this much should be settled. But even more important is protecting the solvency from vicious rumors that prompt speculative attacks. Again, markets being sentiment, all it can sometimes take is rumors of “overbought levels” to prompt profit taking. This is something investors too must be wary of, and play a part in preventing. It is their money at stake as much as the government’s interests. Apart from that, the market has spoken. It may get much better before it gets any worse.
Mr Market speaks
