KARACHI: When Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index hit an intra-day all-time high of 53,124 points on May 25, 2017, hardly any analysts were ready to look back as the majority of them were eyeing 56,000 as the next level before the country moved into the election year, but it turned out to be a mere dream, equity analysts say.
The start of 2017, was euphoric at Pakistan’s equity market and the main index hit a high of 52,876, but circumstances reversed and the index sunk as low as 37,919 points by the end of the year.
“Political turmoil (cases against former Prime Minister Nawaz Sharif), a weak economy and disappointing foreign flows in the equity market were the major causes that put PSX in the reverse gear,” Zeeshan Afzal, executive director-research at Insight Securities, told Arab News.
The market’s worst performance mainly in the later half of 2017 still continues, and the stakeholders expect that the trend will not reverse till the elections are over. The results of the elections will set the future direction of the market.
Pakistan Muslim League Nawaz (PML-N) faces tough challenges after the conviction and imprisonment of Mian Nawaz Sharif. Analysts believe that the PTI will take advantage of the situation and may be in a position to make the next government.
“A polarized political landscape akin to the 1990s, with marginalization of PML-N’s grass root support and swing momentum in favor of the PTI, should underpin the formation of a coalition government at the center,” according to AKD Research.
Pakistan’s 105 million voters will decide about the new government on Wednesday (July 25), in one of the most tightly contested elections in Pakistan’s history.
Nabeel Khursheed, analyst at Topline Securities, says: “We believe one of the following scenarios can unfold: first, the PTI grabs 85-95 seats and forms a coalition with smaller parties and independents; second, the PML-N grabs 80-90 seats and forms a coalition with the PPP, smaller parties and independents; and third, the PTI and PML-N get less than 80 seats.
“In the first scenario the market may react positively as this outcome is expected to lead to a stable government. In the case of the second scenario, the immediate reaction of the market will be negative as former PM and PML-N party head Nawaz Sharif has called the upcoming general elections a referendum against his disqualification. The market may react positively in the long run. In the case of a third scenario the market will react negatively as there will be a brief confusion,” Khursheed explains.
Analysts say no matter who wins the election, the winner should have a clear majority.
“The market will take a positive turn if any party gets a majority or even gets the ability to make a strong coalition government because the split mandate would be negative. The winning of PML-N or PTI will be positive for the market,” Zeeshan Afzal said.
“If the PML-N wins the election with a majority, the market is expected to react positively because they had driven the market to its highest level and investors believe that they will continue with their policies. Investors will react to the elections of others according to the policies of the parties,” Ahsan Mehanti, chief executive of Arif Habib Group, told Arab News.
Analysts believe that whoever makes the next government will have to face tremendous pressure in the first month: There will be no time for a honeymoon because the worst economic situation demands immediate attention.
“The next government will have to show its seriousness about the economic situation. Going to the IMF would be an unfavorable choice as its program will come up with conditions the government will have to meet. Further monetary tightening will turn the investors to other avenues,” Amin Yousuf, CEO of AKY Securities, told Arab News.
“Who will invest in the stock market in a high-interest rate regime,” Yousuf asked, adding: “Investors will turn to other avenues like secured government savings. There will be no more foreign investment in equities as long as the Pak rupee instability persists.”
Two working days are left until the general election. During this period the investors’ interest is likely to remain glued to election euphoria. The vulnerable economic position and persistent foreign selling remain major concerns for valuations.
The interim government has also started preparatory work for a fresh IMF program. In this environment banks, oil and gas exploration and the production sector, and independent power producers are expected to perform well. Persistent foreign selling owing to the sliding Pak rupee, the US interest rate liftoff and the global trade war may continue to drag the index.
Election results to set direction of Pakistan’s stock market
Election results to set direction of Pakistan’s stock market
- Weak coalition government may create confusion among investors
- Political uncertainty, weak economy keep Pakistan stock market under pressure
Saudi Arabia’s cultural sector is a new economic engine between Riyadh and Paris, says ambassador
RIYADH: Culture has become a fundamental pillar in bilateral relations between France and Saudi Arabia, according to the French Ambassador to the Kingdom, Patrick Maisonnave.
Maisonnave noted its connection to the entertainment and tourism sectors, which makes it a new engine for economic cooperation between Riyadh and Paris.
He told Al-Eqtisadiah during the opening ceremony of La Fabrique in the Jax district of Diriyah that cultural cooperation with Saudi Arabia is an important element for its attractiveness in the coming decades.
La Fabrique is a space dedicated to artistic creativity and cultural exchange, launched as part of a partnership between the Riyadh Art program and the French Institute in Riyadh.
Running from Jan. 22 until Feb 14, the initiative will provide an open workspace that allows artists to develop and work on their ideas within a collaborative framework.
Launching La Fabrique as a space dedicated to artistic creativity
The ambassador highlighted that the transformation journey in the Kingdom under Vision 2030 has contributed to the emergence of a new generation of young artists and creators, alongside a growing desire in Saudi society to connect with culture and to embrace what is happening globally.
He affirmed that the relationship between the two countries is “profound, even cultural par excellence,” with interest from the Saudi side in French culture, matched by increasing interest from the French public and cultural institutions unfolding in the Kingdom.
Latest estimates indicate that the culture-based economy represents about 2.3 percent of France’s gross domestic product, equivalent to more than 90 billion euros ($106.4 billion) in annual revenues, according to government data. The sector directly employs more than 600,000 people, making it one of the largest job-creating sectors in the fields of creativity, publishing, cinema, and visual arts.
Saudi Arabia benefiting from French experience in the cultural field
Maisonnave explained that France possesses established cultural institutions, while Saudi Arabia is building a strong cultural sector, which opens the door for cooperation opportunities.
This comes as an extension of the signing of 10 major cultural agreements a year ago between French and Saudi institutions, aiming to enhance cooperation and transfer French expertise and knowledge to contribute to the development of the cultural system in the Kingdom.
He added that experiences like La Fabrique provide an opportunity to meet the new generation of Saudi creators, who have expressed interest in connecting with French institutions and artists in Paris and France.
La Fabrique encompasses a space for multiple contemporary artistic practices, including performance arts, digital and interactive arts, photography, music, and cinema, while providing the public with an opportunity to witness the stages of producing artistic works and interact with the creative process.
