KARACHI, Feb 21: Pakistan’s stock market on Wednesday reacted positively to the announcement of a deal between two major political parties– the PML-N and the PPP–to form a coalition government after the general election resulted in a hung Parliament
The Pakistan Muslim League-Nawaz (PML-N) and the Pakistan Peoples Party (PPP) have agreed on a power-sharing deal to form a new coalition government after intense negotiations following a fractured poll verdict in the February 8 polls.
The first clear picture of the new government after the general elections led to shares at the Pakistan Stock Exchange (PSX) gaining over 900 points with analysts expecting more gains by the close of day.
The Karachi Stock Exchange 100-index has been taking a hammering since the general elections on February 8 and the failure of parties to reach a consensus over the formation of the government.
The elections have become controversial after the PTI and some other parties have claimed alleged massive rigging in some constituencies which they say allowed PML-N and PPP to win more seats than they won.
Tahir Abbas, head of research at Arif Habib Limited, analysed that the market went up 1.5 per cent after clarity emerged on the formation of a new government.
“This has obviously bolstered investor confidence,” he said.
Faisal Tamanna of Capital Investments noted that investors are now more interested in seeing what new economic strategy is unveiled by the new government to bolster confidence in the market.
“Once the government shares its economic formulas, investors and companies will also be able to plan their long-term strategies accordingly,” said Tamanna.
Yousuf M. Farooq, the director of research at Chase Securities, said that whatever economic policies the new government decides on will have to be in line with the conditions set forth by the IMF if Pakistan wants a final tranche of USD 1.2 billion from a Stand-By-Arrangement package of USD 3 billion this year.
He, however, cautioned that investors would also be watching closely the strategy of the opposition parties led by the Pakistan Tehreek-i-Insaaf, which appears to have been ahead in the elections.
According to the PSX website, the index was trading at 61,422.16 points at 9:55 am, up 957.92 or 1.58 per cent from the previous close of 60,464.24.
In a joint news conference late Tuesday night, Pakistan Peoples Party Chairman Bilawal Bhutto-Zardari announced that PML-N president Shehbaz Sharif, 72, will assume the role of the prime minister once again. Similarly, PPP co-chairman Asif Ali Zardari, 68, will be the joint candidate for the president’s office. (PTI)
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