Someone’s thinking finance
Sure, the PSX turned out the fifth best, meaning most earning, stock market in the world in ’16 and the best in Asia. But, please, scratch beneath the surface a little before going long straight away, even though you’re assured a killing, more or less, well into the medium term – just as long as you know when to hop out. But that’s not the point. Point is, mad bull runs are hardly a long term rarity in run down economies of the south like Pakistan’s. Remember the Citi banker turned our finance minister turned prime minister and the stock market gold rush of ’04 and ’05? Remember the Wall Street Journal, Financial Times and Economist headlines back then? Remember, also, the epic crashes that followed? The grapevine wouldn’t stop about how the PM, a couple of his advisors, and one junior finance minister, one who’s grandfather ruled the roost for so, so long once up on a time, laughed all the way to the bank each time.
PSX, though, is different. Why would a Chinese consortium – made up of no less than the China Financial Futures Exchange, the Shanghai Stock Exchange, Shenzhen Stock Exchange, Pak China Investment Company Ltd, and Habib Bank Ltd, buy a 40pc stake in the Exchange just stitched together? One, of course, is the Chinese tendency to build on its assets. CPEC implies a long-term stay. PSX, for all its headlines, is still about plain, old fashioned stock trade. It lacks even everyday investment vehicles like options and futures. And even in this modern age the financial fraternity is largely deprived of trading in the biggest, most liquid modern day market – the $5-7 trillion a day international currency and commodity market. Chinese influence, investment, and now expertise, will lubricate the CPEC bonanza now with a restructuring of the capital market. If this works out as planned, the game changer will assume yet more significant proportions.
Another reason, and this is important, is the desire of the Pakistani financial establishment to turn legit. The KSE thing suited the king makers just fine. They had little trouble playing the same blue chips up and down now and then. The merger and coming to life of PSX itself is indicative of a very serious reaslisaiton of the financial gains the forty-percent selloff – apparently envisioned when PSX plans were laid – on the part of the stock market players. But the proof of the pudding lies in the eating. And the market is very serious business. It runs on sentiment just as much as on the hardcore finance that defines them. 2016 showed someone very high was thinking very serious finance. The new year will show just how serious they were.