- Political overlap
It should worry the government to no end that the local stock market, which ended 2016 as the region’s best performing bourse, ended the next year (2017) as the worst in the whole world. And, what is worse, the trend has continued well into 2018. Yet that is not all. Much, if not all, of this rout has owed to political, not financial, reasons. Ever since the Panama verdict political developments have impacted the capital market to a criminal degree.
First it was the ‘mujhay kyun nikala’ confrontation that hurt the market, then uncertainty about cases involving Ishaq Dar would send it into a tailspin, then even news involving Captain Safdar and anti-judiciary venom from Maryam Nawaz also sent investors packing. Now, the humiliation at FATF has once again taken the stock market through the floor. Yet rather than worry about it, it is the government itself that is responsible for this scandal. Nawaz’s confrontationist posturing, Dar’s deliberate absence and Maryam’s sabre rattling are all calculated to cause confusion and unrest. And one thing the market dislikes even more than bad news is uncertainty. The FATF debacle, too, was due to the government’s own mishandling, not some conspiracy by our enemies.
Looking at it from foreign investors’ point of view really puts the picture in perspective. The elevation to emerging market prompted punters in financial hubs like Hong Kong, Dubai, London, etc, to route their investments to Pakistan. There was much shine on the PSX, after all, and books of the best companies gave no reason for worry. Yet when news completely decoupled from the market makes it hemorrhage thousands of points and sends billions in local and foreign investment to money heaven, the beeline to the exit door is understandable. Then there’s the damage done to local companies and their employees. When stocks are murdered in market trading, companies’ earnings are impacted; implying a downward trend in wages, standard of life, etc.
It is a great tragedy that the PSX’s dream ride was decimated by actors supposedly belonging to the ruling party – for their political purposes – leaving investors fuming, the local industry hurt and our reputation in tatters.