LAHORE, Oct 5: Some experts expect the investments in real estate and stocks markets to boost in the next few weeks, others maintain that the people are keeping their savings in cash “at home” due to the uncertain regional situation and an imminent war on Afghanistan.
Economist Dr Salman Shah attributed the erosion in dollar value in the last few days to increased supply of the greenback in the market for a variety of factors.
“The demand for the dollars hasn’t declined. I guess that huge amount of money might be flowing into Pakistan to support the war (against the Taliban). Moreover, the overseas Pakistanis are not using the channels of hundi or hawala for transferring the money back to Pakistan for fear of checks imposed (by the foreign governments) on these channels. A surplus is also building up due to closure of the Afghan transit trade. Those who had invested in the transit trade would no more be able to do it,” he says.
Therefore, Dr Shah adds: “I think more investment will be made in real estate as well as shares in next couple of weeks or so as is evident from the rising index of the stock market.”
He is also hopeful that the “economy would be given a boost by the expected free trade agreement with Europe as was indicated by the British prime minister during his Friday visit to Islamabad.” “If a similar agreement is reached with the US, our exports would get the push they had been always craving for.”
Stock market analyst Dr Shahid Zia, however, believes that the people are hoarding cash at home due to an unpredictable regional situation. He says the people are scared that banks might also be closed down if the US and its allies decide to strike Afghanistan to avenge last month’s terror raids on New York and Washington.
He says it is a “bad situation” for investors. “They’re afraid of investing their money or keeping it with the banks. They don’t have the kind of conviction which could induce them to invest the money — in real estate, shares or business — although there are some investors who are buying stocks despite uncertain situation. They fear that the share prices would tumble in case the expected war starts.”
