- Anybody remember the market?
For all the damage Nawaz’s controversial interview has done, nobody has quite noticed how it also sounded the death rattle at the stock market. Three weeks in the red now, the last being the worst weekly rout of the year so far; all because political uncertainty amid very worrying indicators has triggered a foreign portfolio investment (FPI) exodus. The windfall of 2016 seems so distant now, when the Pakistan Stock Exchange ended the year as the best performer in the region. It ended the next year, however, as the worst performing in the whole world. And dominant reasons for the carnage have all been political, not financial or even remotely market related, and all revolve around the Sharif family especially Nawaz.
Now, just like before, his statements are spreading panic in the capital market. And the one thing the markets hate even more than bad news is uncertainty, of which Nawaz is causing plenty at the moment. It was not too long ago when N-league loud mouths would rub the rising stock market in everybody’s face as a barometer of the real economy’s trajectory. Now, though, they have all fallen silent as, even if the equity market is not directly related to the real economy, there is still a coupling, of sorts, between FPI and FDI.
And it’s not just the stock market, of course, that the outgoing electoral cycle is leaving in pieces. The real economy has also collapsed. The deficit, at the risk of repetition, is the widest ever. And there’s barely two months of import cover left. Then there’s the huge debt burden to deal with. Any government that forms after the election, therefore, will stare the threat of default, no less, in the face. Meanwhile Nawaz, as if oblivious of is long, long reach, continues with his controversial statements.