Pakistan stock market’s bumpy ride in 2017

F.P. Report

KARACHI: Pakistan Stock Exchange once a shinning star, now huddled by political and economic events. Index lost 15.4% in 2017.

Pakistan Stock Exchange which was one the best performing markets in the global arena in 2016 portrayed a different picture in 2017 and the ride was quite bumpy and benchmark 100 index during whole year plunged by 15.4 percent.

The journey of the stock market was quite healthy and steady growth was witnessed till hit the all-time high mark of 52876 points on May 24th 2017 where the market capitalization also crossed the coveted level of Rs 10 trillion, reaching nearly Rs 10.446 trillion.

But the bulls got exhausted as they received heavy beating from bears and investors’ confidence battered badly which was cemented owing to number of factors which chopped the share values sharply.

Largely the confidence of investors measures after the announcement of the budget where series of new taxes were imposed on the brokers community especially change in the schedule of tax on capital gains. Moreover, government kept gulf between the investors community and brokers which also created crater in the confidence.

However, the major upset arrived from the disinterest of the foreign investors in the stock market as against expectation arrival of funds from international institutions diminished sharply despite entry of Pakistan Stock Market into the MSCI emerging market index. The bourse got upgraded but it failed to attract investors rather on yearly basis the net outflow from the overseas investors amounted to nearly 500 million dollars which was high as compared with last year selling of 345 million dollars.

Steam of selling was continued unabated rather accelerate as the acceptance of the apex court from NAB to starting hearing on JIT against former Prime Minister Nawaz Sharif was the tremor and the stock market for the first time on daily basis plunged by 2153 points on July 11.

The removal of former prime minister and finance minister got approval to go for sick leave were enough for the market and index following these happening still unsettled and index during the year hit below 38000 mark also. But formation of the new team by the current Prime Minister Shahid Khaqan Abassi saddling Miftah Islmail and Rana Afzal Khan in the ministry of finance gave positive signals.

However, much has to be done as time is short because now only five months left for new election. Major steps are required to bolster the confidence of the investors, however major issue for the analysts has been the economic numbers which cast dark shadow as country would be requiring nearly 6 billion dollars to be paid as external debt and principal payment. Dependence on financial institutions have increased and government would require some out box solution to meet the challenges on the economic front.

The stock market started the journey from 47806 points, reached to all time high of 52876 points on May 24, however closed at 40463 points on Dec. 29, 2017. On yearly basis the index lost 15.4 percent and from its peak it showed a decline of 23.4 percent.