Business | Opinion
Markets must reconcile with global and domestic trends
The latest information outlining the fall in portfolio and direct investments in Pakistan in the past few months highlights a potentially alarming trend for the country's stock market.
- By Farhan Bokhari, Special to Gulf News
- Published: 00:16 March 23, 2008
Islamabad: The latest information outlining the fall in portfolio and direct investments in Pakistan in the past few months highlights a potentially alarming trend for the country's stock market.
Analysts on the Karachi stock exchange are by and large anxious to promote the market's long term stability as a point of future reference in spite of the alarming signs.
The truth however is that Pakistan's markets must reconcile themselves with a variety of global and domestic trends which are bound to influence their outlook.
Power equation
On Pakistan's domestic front, lingering uncertainty caused by President Pervez Musharraf's refusal to accept a role for himself which is secondary to the position of the new parliament, will inevitably present major challenges for Pakistan's new democratic order.
It is impossible to imagine a situation where Musharraf remains as powerful as in his yesteryears while the newly-elected members of parliament are also able to assert themselves.
Ultimately, only Musharraf's departure and his replacement by a more democratic figure will set the pace for a qualitatively new and improved political order.
Significant challenges
On the economic front, the new prime minister who will be elected tomorrow will face significant challenges.
Harsh descriptions such as a coming economic meltdown have indeed been used to describe the coming scenario when a number of issues which are directly relevant to the economy will crop up.
Already, Pakistani industries which are listed on the stock market have suffered from the recent increases in domestic energy costs led by higher tariffs for petrol and diesel.
The issue of global oil prices will remain a major factor for the future of economies of oil importing countries such as Pakistan, unless oil prices go into a significant retreat.
Other significant issues include the reality of an economic slowdown which has already manifested itself through ways such as falling consumer spending and sluggish indicators in areas like new loans given to borrowers.
Investors in Pakistan's markets face some difficult choices.
But withdrawing from Pakistan in the midst of a downturn is indeed not the world's best option.
- The writer is a journalist based in Pakistan.
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