Shares in the Pakistan Stock Exchange (PSX) fell sharply on Tuesday, owing to political uncertainty and a delay in the completion of the International Monetary Fund’s (IMF) ninth review, according to political analysts. The benchmark KSE-100 index fell 1378.54 points, or 3.47 percent, to 38,342.21, its lowest level since July 27, 2020. After three gloomy sessions, bulls returned to the Pakistan Stock Exchange on Wednesday.
According to Arif Habib Ltd, the benchmark of 100 representative shares remained higher as investors chose to cherry-pick stocks at appealing rates. It went on to say that investor participation increased dramatically after the governor of the State Bank of Pakistan issued a “much-needed” clarification on the issue of letters of credit. As a result of his remarks, the benchmark reached an intraday high of 603.76 points. The volume of traded shares on the main board of the exchange remained healthy.
Since last Friday, the benchmark KSE-100 Index has dropped around 2,000 points (about 5%) as a result of panic caused by the PTI’s decision to dissolve the KP and Punjab assemblies, as well as speculation that the government has missed the window to conclude negotiations with the IMF for the ninth review of its ongoing bailout program.
The situation is indeed dire, and it is likely to worsen due to our political leadership’s inability to act responsibly even when the country is on fire. The total value of shares listed on the stock exchange has reportedly declined from around $100 billion in 2017 to around $24 billion currently. There are numerous reasons for this massive drop, but the bottom line is that anyone who invested in stocks as a long-term investment would have lost more than three-quarters of its value in dollar terms during that time period.
With returns like these, it’s no surprise that so few people want to invest in Pakistan. Even after the economy began teetering on the brink of collapse a year ago, our economic managers have been powerless to prevent disaster. Both the PTI and the PDM took disastrous steps to protect their political positions.
First, fuel and energy prices were frozen in the first half of the year; then, in the second half, the dollar-rupee exchange rate was unofficially frozen. Ordinary people are still paying the price for both decisions, as whatever wealth they had evaporated due to searing inflation. While much of the blame falls on the incumbent finance minister, who has failed to devise any logical or coherent strategy to bail out the economy, other politicians must also be held accountable for their roles. Since last year, the PTI and PDM leaderships have demonstrated that when their political interests are at stake, they care little about the country’s economic health.
Both factions have shown a reckless disregard for the consequences of political brinkmanship on the people they claim to lead. As a result, the cycle of instability triggered by the vote of no confidence last year has worsened, and a sense of despair now pervades all aspects of life. How long must the country suffer in order to appease the egos of a few powerful people?