IF one has money invested in the stock market, and wishes to know why the latter is falling so rapidly at a time when everyone said it would be rising, there would be no way of finding out. The news is full of quotes from brokers that the situation has arisen because the prime minister has been summoned by the JIT; others say it is because of the Trump administration possibly taking a harder line towards Pakistan, and yet others attribute it to whatever news is in the headlines. But beyond what these brokers tell us, there is no source of reliable information to allow one to build an accurate picture of where all the selling pressure is coming from. The stock exchange management maintains a website with some data, usually just about the trades conducted on that day, with volumes, opening and closing values and some rank-and-file information on listed companies. But when a broker says that there is selling pressure because mutual funds are pulling out, for example, there is no way of verifying this claim. In fact, the paucity of information that retail investors have on market drivers means they essentially operate blind.

Markets can rise and fall due to very complex factors, but it would be naïve to believe that large market players have grown jittery about the prime minister’s prospects since the JIT hearings began, or that recent news items about the future of Pakistan’s relations with the US have triggered enough concern to impact market decisions. Basic common sense tells us that the market was oversold in the run-up to its inclusion in the MSCI index, and when the much-hyped inflows from foreign institutional investors did not arrive in the quantities anticipated, there was a stampede for the exit. History tells us that the big fish are the first out the door in such situations. And experience tells us that once a downswing of this sort kicks in, it acquires a momentum of its own. Far more than any political strategic uncertainty, it appears the market is in the grip of some such panic. The best antidote to quell such episodes is the release of sound information that can be used to build a true picture of where the buying and selling is coming from. The PSX management should consider revamping its website, and releasing relevant information to stop the panic.

Published in Dawn, June 22nd, 2017