The KSE-100 index saw its worst annual returns since 2008. On the other hand, it was the best year for Asian markets since 2009. The benchmark 100 index at the Pakistan Stock Exchange (PSX) yielded a negative return of 16 percent in 2017. It was also the first time last five years that the index yielded negative returns. Meanwhile, Sensex yielded 29 percent, Dow 19.6, Hang Seng 36, S&P 500 19 percent and the list goes on.
It was essentially a tale of two halves at the PSX, on either side of the final Panama verdict. Recall that market had touched an all-time high of 52876 on May 25, 2017, only to see the lows of 38000 in the months to follow.
Recall that the ruling party was not the only one taking positives, if not distributing sweets, after first Panama judgment on April 20, 2017. The no-ouster of the then PM Nawaz Sharif and the formation of JIT were absurdly seen as vindication for the then PM and the 'end of uncertainty'. It proved to be neither, and what followed is well documented. All those dollars raised in the international bind markets and the MSCI frenzy could not help much, as politics continued and still continues to dictate the state of affairs.
One bad year is understandable, especially when surrounded by a hostile and constantly changing political scenario. But it was the lack of activity at the bourses that should take the headlines. The volumes shrunk by a quarter over 2016 at the KSE-100 index. And the drop in volumes has gotten from bad to worse, quarter after quarter. What was 146 million in 1QCY17, came down to less than half at 70 million in the final quarter. While the market in terms of return had a bad year since 2009, in terms of volume, they were last lower when even 11/9 had not happened.
One thing is clear that the political scenario is going to shape which way the market is headed to, until at least in the run up to the elections. The 6 percent gain in the last ten trading sessions has been attributed to CM Punjab's acquittal from the Hudaibya case, and his subsequent nomination for the PM slot.
No one knows nothing for certain, but one thought the Panama judgment misreading would lead to a better sense of judgmental the market.
That does not seem to be the case, because, if anything, 2018 is just going to be more hostile in terms of opposition, rallies, movements, deadlines and all sorts.
Elections are near, but eight months is a long time in terms of stock market movements. The valuations may well be attractive, but if politics is what defines market, beware.
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