Business | Markets
Politics to weigh heavily on stocks
Pakistan's equity markets will open tomorrow reacting instantly to the mood set by the opening of the country's new parliament on the day.
- By Farhan Bokhari, Special to Gulf News
- Published: 00:01 March 16, 2008
Islamabad: Pakistan's equity markets will open tomorrow reacting instantly to the mood set by the opening of the country's new parliament on the day.
The link between Pakistan's politics and the economy is being closely watched by investors and analysts across the Karachi Stock Exchange.
Despite the political crisis that has continued since president Pervez Musharraf declared an emergency in November, the Karachi Stock Exchange (KSE) has recovered some of the ground it lost. It is impossible to tell if the KSE's resilience will be sustained in the weeks ahead. At the top of the sustainability factor will lie the political future of Musharraf who has consistently defied his critics and repeatedly appeared to be driven only by the objective of saving his own job.
Musharraf's determination to stay in power may well create the basis for his detractors to repeatedly attack him with greater intensity. For the markets, the issue will not just be exactly who rules over Pakistan. Of greater significance will be the extent to which this infighting will create the room for instability that could jeopardise many key policies.
Mood shift
The mood in the markets now is a major departure from the days when Mush-arraf's continuity as Pakistan's president was considered the prime basis for the country's economic future. Now, Musharraf has become a liability. The bigger question for the markets, however, is the extent to which this liability will translate into a regressive push for their future interests.
The government will take charge at a time when Pakistan faces a growing list of economic challenges. There are many who are well aware of the need to strongly push up energy costs in line with rising international prices. The difficulty in doing so, however, will be the resultant effect for the future of Pakistani industry which is already suffering from its inability to compete with other rising industrial powers in the region.
Energy crisis
The government will also face such unpopular trends as the consequent effect of a fast-building energy crisis that has begun translating into long power cuts. With electricity tariffs already high in Pakistan compared to many other countries, the power cuts have left industrialists with little choice but to rely on the establishment of local power generating units in spite of their higher running costs.
In the short run, it is the political future of Musharraf and the political stability factor that will set the pace for the new government's outlook. But going forward, the tough econ-omic choices facing the regime will establish the outlook for the economy and industry.
Other areas of significance to the KSE include broader matters tied to the economy. Agricultural production should be on top of such matters. Though not immediately of significance to the Karachi Stock Exchange on a daily basis, there is an established connection between agriculture and the economy.
- The writer is a journalist based in Pakistan.
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