Why The Bear Isn’t Leaving Our Stock Market? It’s Because Of Negative Sentiments, Threatening Statements
The Pakistan Stock Exchange was Asia’s best performing market in 2016 and the trend continued into the first part of 2017, as it reached 53,124 points in May that year. Investors were talking about crossing the 56,000 mark. But everything went south amid political instability and the resultant uncertainty.
Things got gloomy and the KSE-100 Index closed at 45,741.43 points on April 2, 2018. It was at 42,089.16 points on July 26, 2018 – the first day after the general elections. Currently, the KSE-100 Index stands at 33,742.68 points on July 8, 2019.
Now we have a look at the overall situation of economy. The businessmen aren’t happy; they are, in fact, desperate. The summary: The Hall Road electronics market in Lahore remained closed on Friday and the entire markets are shut in Faisalabad today (Monday).
Meanwhile, the government representatives claimed after a meeting with traders at Lahore’s Governor’s House that they were going to end the condition of CNIC for retailers and ready to introduce fixed tax system. But the traders said it wasn’t true as they were told that the CNIC condition had been delayed only for a month. Result: Who can trust the government in this situation?
Read more: Between The Devil And The IMF
Coming back to the stock market, senior journalist Riaz Andy, talking to NayaDaur Media about the reasons behind this trend, said both international and domestic factors affect the market. At the world level, situation has changed and economy isn’t performing that well amid the economic slowdown.
He was referring to the issues like the ongoing tariff war between the US and China, the Gulf crisis and Brexit.
At the domestic level, according to Riaz, the regulator SECP (Security and Exchange Commission of Pakistan) did not discharge its duties. Secondly, the market base is limited as very few new companies have been listed at the Stock Exchange – meaning it is not expanding.
But Riaz listed negative sentiments as the main reason, saying the market operates on sentiments as it cannot perform well amid negative sentiments.
He cited State Bank Governor Dr Reza Baqir who had stated during his press conference on June 17 that negative sentiment was the only threat.
The market performed during the first two years of the Nawaz Sharif government because of positive sentiments as he overcame challenges of power shortage and terrorism, thus boosting the morale of and giving confidence to investors, said Riaz.
Similarly, Syed Israr Bokhari – who is an income tax lawyer and an investor in the stock market – also pointed to the negative sentiments, as he especially mentioned the threatening statements of Prime Minister Imran Khan as well as his ministers and the government’s anti-investors policies.
Bokhari said measures like giving powers to the SECP to enter any business premises and launch investigation would only further spread fear among investors and businessmen. Furthermore, introducing the condition of cross cheque for any dealing between a broker and his client intrudes the right to privacy, thus further frightening the business circles, he added.
The stock market, as Bokhari stressed, needs foreign investment but it isn’t possible amid political uncertainty.
To sum up, steps like empowering government agencies to access citizens’ bank accounts, political tussle between the government and the opposition, and the paltry growth projections are giving bad signals to the investors. The stock market cannot remain immune to all this mess.