The end of trading at Pakistan's Karachi Stock Exchange on Monday, Jan 21, 2013, saw the benchmark KSE-100 index make modest gains. This was driven in part by rising investor confidence in the market after last week’s political standoffs.
The standoffs included a court order to arrest Pakistani Prime Minister, and large marches for fair and transparent elections in the next few months. The KSE-100 index ended at 16,640 on Monday, up from 16,601 at the close of trading on the previous trading day.
Meanwhile, the Utilities sector witnessed a decline of 127 points, along with a 77-point decline in the Oil and Gas sector, a 66-point drop in the Basic Materials sector, and a 55-point fall in the “Financials” sector.
In the Lahore Stock Exchange, the picture was bleaker. The benchmark index at LSE declined by a good 70 points down to 3,328. In contrast, the Islamabad Stock Exchange saw its benchmark index rise by a meager 5 points to 2,443 points.
While the political situation may have stabilized somewhat after the tumultuous events of a week ago, Pakistani is still faced with economic and other political issues. The lingering lack of security around the country, poor economic outlook, lack of foreign investor confidence in the domestic economy and the government’s inability to provide security have all dented the prospects for a major turnaround in the lackluster Pakistani economy.
Barring short-lived, speculative foreign capital driven spikes in the KSE, LSE or ISE benchmark indices, the prospects for a sustained major turnaround for these indices remain low. The most traded stocks tend to belong to the Oil and Gas, Power, Cement, and Banking sectors.
While volatility and unpredictability of the general or benchmark indices remain par for the course for any stock exchange, when it comes to Pakistan, one may reasonably predict no massive sustained rise in the foreseeable future unless the external and domestic political conditions improve markedly.