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Dubai: The turmoil on the Karachi Stock Exchange (KSE) has caused nervousness among domestic and foreign investors.
The last-minute intervention by government-backed institutions on Thursday helped save the day, though without clarity on the main matter of how long this stability would last. On Friday, too, the KSE closed in the negative.
The political atmosphere is the main cause behind this trend. For many investors, the prospect of continued fighting between President Pervez Musharraf and his political foes only promises to pull down the outlook for investments.
There is no assurance that the turmoil will end any time soon. In the coming days, it is possible that the stock market may tumble once again perhaps even more than what has been observed so far.
Even if there are short term bailouts of the kind seen recently, there is every possibility that the effort to sustain the stock market may not endure. Going forward, one political storm after another may indeed pull sentiment down.
While the latest problem is worrying, there is also much to say about the market's stable fundamentals. Stock markets all over the world are prone to political uncertainty and Pakistan is no exception.
Given the tricky history of Pakistani politics, there is every chance that the current phase of a tumbling market may last till such time that there appear to be clear signs of returning political stability and certainty to the country.
Unique history
Investors who are eager to take a long term position must appreciate the unique history of Pakistan and understand that the Karachi market's fortunes will undoubtedly turn around for the better.
In the coming weeks, there will be plenty of opportunities for consolidation and a return to relatively normal times as the stock market regains some of its lost ground.
For savvy investors, the best advice at the moment would be to demonstrate patience and resilience rather than becoming influenced by intense nervousness of the kind which pushes them to make rash decisions. For investors who can afford to stick out the latest period of turmoil in the Karachi stock exchange, there is more than the even chance for a recovery down the line.
- The writer is a journalist based in Pakistan.
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