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THE national political scenario emerging after Saturday’s general elections seems to have energised Karachi’s stock market. On Monday stocks crossed the 20,000 point mark for the first time and the rally continued on Tuesday as the KSE-100 index gained 229 points. While investors’ confidence in the post-election set-up is understandable, the KSE’s performance is still surprising considering the country’s generally morose economic situation. Two things are clear: investors are feeling positive because a stable PML-N government is likely to take the reins in Islamabad as opposed to earlier fears of a split mandate, while the business community has a soft spot for Nawaz Sharif, considering him a pro-market politician. There are also other factors responsible for the stock market’s impressive recent performance. Market watchers point out that most of the investment has been foreign; in the first four months of the current year over $200m of foreign funds have been pumped into the KSE while locals have mostly been selling. Also, while the rise indicates positive trends, it is a tad misleading as the weightage of certain stocks is relatively high. The amnesty granted by the government last year whereby no questions would be asked of investors about the source of funds till 2014 is also said to be responsible for attracting liquidity to the market, though some may have used the amnesty to launder money.

Regardless of the ups and downs of the stock market investors have positive expectations of a Nawaz Sharif government and it is hoped the PML-N will take tough, bold decisions to put the economy back on track. Foremost amongst the challenges the incoming political government must address are circular debt, the energy crisis and tax reform, while the market requires a stable law and order situation to do business.

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Comments (3) Closed

Iftikhar Husain May 16, 2013 11:11am
Allah will help those who are capable to help themselves.
javaid bashir May 16, 2013 10:35am
the post election market has shown sudden rise in the stock market. its 100 index shows marked gains which indicares the investors confidence and rise in foreign investments. The money is coming in which is also good for over all economy. Nawaz Sharif is considered pro business politician, therefore we can see the sentiment and rally in the stock market beyond expectations. there are other reasons too, that can be discerned by this rising profits and share prices. we must take advantage of good news. But we can not bank upon this rallying in the long run.We must create opportunities for the people in the industrial sector. We must address the crisis of energy and inflation. The prices of commodities must come down to give the breathing space to the people. we hope that the government will create not opportunities but also change the economic policies. JAVAID BASHIR
MOHAMMAD May 16, 2013 06:28am