Wednesday May 31, 2023

‘PSX may gain during caretaker setup’

May 17, 2018

KARACHI: Analysts expect robust performance by Pakistan Stock Exchange when the caretaker setup takes up reins starting June 1, 2018 as average returns recorded during interim governments in the past have been in excess of 14 percent on investment in equities.

According to data prepared by Arif Habib Limited, during the last interim set up observed from March 25, 2013 to June 5, 2013 the index recorded an appreciable gain of 23 percent.

During the other two interim set ups, where Muhammad Mian Soomro held the office of the prime minister from November 16, 2007 to March 25, 2008 the stock market recorded an increase of 15.5 percent. When Malik Meraj Khalid held the office of the Prime Minister between November 5, 1996 and February 17, 1997, the market was raised by 15.3 percent.

Similarly, when the second interim set up with Moin Ahmad Qureshi as Prime Minister was sworn in during July 18, 1993 to October 19, 1993, the market gained 14.4 percent, the data revealed.

Before that, during the first caretaker setup of Balakh Sher Mazari, the market gained by two percent. The caretaker set up was formed on April 18, 1993 while it ended by May 26, 1993.

The market since last the two decades or so, saw topsy turvy sessions and political and economic developments dictated the capital market, while on several occasions the fundamentals of the companies were totally ignored, the report said.

Last year, the stock market on May 24, 2017 had reached an all-time high at 52,876 points.

Between May 24, 2017 and April 6, 2018, the market has remained volatile due to successive events. Panama Papers, formation of joint investigation team and subsequent removal of Nawaz Sharif as PM, imposition of 15 percent capital gains tax, and budget announcements along with poor macroeconomic indicators triggered selling from foreign investors.

The market hit lows of 37,919 points on December 19, 2017 losing over 39 percent compared to the peak.

Though in the following sessions, from December to April, the PSX did strengthen, and gained 23 percent to reach 46,637 points by April 6, it was against the expectations as analysts had hoped to see a bigger surge.

They began looking forward to federal budget 2018/19, expecting it to soothe the investors’ mood with the announcements of some good measures.

However, the index once again suffered heavy dents due to the sharply rising political temperature ahead of the general elections, especially in view of the former prime minister’s statement over Mumbai incident.

Stocks have lost almost 10 percent since April 6, 2018 in a little over a month, and now the analysts have pinned their hopes on the caretaker set up. The index might gain following the pattern witnessed in the previous interim governments, they said.