By: Ahmed Mukhtar Naqshbandi
Positive impact of PML-N government on investors, recent large number of inaugurations by PM and role over of energy projects have helped set upbeat mood of investors in stock market.
Market has taken recent positive developments on economic front, as a mood improving and investment friendly overtures. International investors are about to enter the one of the top performing market in the region, PSX, only itch is the political upheaval that can create a big void at this stage.
Market grows on stability and positive mood, negativity kills investment and restrains the investment.
With that heavy taxed budget and politically motivated & election-based budget were expansionary measures hitting hard on the investor mood.
Large scale public investment coupled with heavy entry of Chinese investors into the real sector has changed the mood of portfolio investors, which are largely local or Europeans. Textile sector has seen Chinese entry. Real estate, construction, engineering, etc are waiting for Chinese in Punjab and Sindh.
While, in Gawadar, Chinese are active in real estate. Gradually increasing influence of Chinese in various sectors are reducing the caution and suspicion from Pakistani investor and policy makers.Future concept of Gawadar as an oil city by Chinese, is another positive influencing factor on investor mood.If current political pressure continues market will take it negative and if Chinese investor got shied away then it will hit the market even badly. If Chinese investors stay apolitical and did not get any pressure then in the longer run, it will help quickly revive the market, when political dust would start settling.In last few years, Pakistan market has reemerged after many structural adjustment with bigger size, more activity and greater linkage with global market. This market was previously aloof, ridden with low activity and exposure with smaller size. Now its size matters, its activity quickly attracts international investors. Recent linkage of Pakistani routes with CPEC has also influenced the market mood drastically upbeat.If market underwent this political change with quickly adjusting itself, even then, it would revert to bigger activity. It will only receive heavy blows if uncertainty continued.
Relations with Afghanistan, India and others did not create any dent but with improving ties with China and Russia had helped in many ways from market to foreign relations front. Indian pressure had been subsided by these big forces. Market had taken these too positively.As soon as certainty is restored in the market, political front becomes smooth, market will show positive trends. But elections are also around the corner meaning another jolt of uncertainty is also in awaiting. Longer uncertainty will elongate the issues in market. This political turmoil must end quickly to give stability in economy and market.
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