For a long time, the Pakistan Stock Exchange performed exceptionally well. Over the years of stable and improved political security indicators, economic activity in the country was further strengthened. Suddenly, political turmoil gripped the country as the Panama Leaks indicted the leader of the ruling party.
These are the reasons why the Pakistani stock market has experienced great volatility.
Political domino effect:
Pakistan’s largest party and prime minister charged in Panama Gates and overthrown after marathon hearings at the country’s highest court. As a result, PSX, Pakistan’s largest stock market, invariably had a ripple effect everywhere. When the KSE100 index fell after hitting an all-time high of around 53,000, it fell more than 30% despite venturing into the MSCI regime.
Risk of tax fudge:
Persistent increase in the current account deficit due to a larger trade gap driven by a significant increase in imports versus exports. Pakistan’s trade deficit increased 24.18% to more than $ 9.2 billion in the first seven months of the current fiscal year, while foreign exchange reserves were declining at a rapid pace. Markets are concerned about how the local return of rupees in the recent past, a larger trade deficit, may put additional pressure on the Pak rupee.
Total liquid foreign reserves held by the country amounted to $ 18.413 billion at the end of February 2018, including $ 12.34 held by the SBP and $ 6.067 billion remaining in commercial banks.
Remittances abroad:
According to figures released by the State Bank of Pakistan for the July-February period it increased by 3.41% to $ 12,833.64 million compared to $ 12,410.54 million for the corresponding period last year.
Foreign direct investment (FDI) remained dry in the seven months of fiscal 2018, as FDI inflows reached $ 1,487 billion during July-January of fiscal 2018, compared to $ 1,532 billion a year ago .
Recovering Exports:
Exports achieved the highest monthly growth so far in the fiscal year, registering an increase of 16% in dollar terms in February 2017. However, exports for the current year have already contributed additional inflows of around USD 1.5 billion during the first eight months and is expected to reach an additional USD 2.5 billion, during 2017-18. This increase in economic activity in the external sector reflects an increase of 0.8% of GDP.
Monitor macroeconomic trends:
The economic manager must maintain CHECK the current macroeconomic trends to sustain the growth achieved and the enormous recovery in the coming financial years as long as fiscal discipline is controlled and controlled. These are the encouraging signs of accumulation.
Timely completion of energy projects and low cost of production would reduce the cost of production.
Inflation rate around 4%.
CPEC projects underway.
Senate elections clearing up political vagueness.
Attractive appraisals.
Potential growth in FDI.
