PSX can suffer due to corruption, inflation: Forbes

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American business magazine Forbes has issued a report regarding the factors that could affect Pakistan Stock Exchange (PSX), reported Forbes.

According to this repost, PSX can suffer loss due to corruption, inflation, or revolution.

The usual suspects that haunt frontier and emerging markets: inflation, corruption, and revolution. Not always in the same order.

South Asia and Latin American countries have also been in a similar position before.

The magazine further added that Pakistan’s low inflation, for instance, is hard to maintain at these levels, as a poor infrastructure creates bottlenecks, which could push prices of basic commodities higher. Besides, Pakistan is heavily reliant on imported oil, which has almost doubled since last January.

Pakistan’s stock market has been on a tear in recent years. The country’s main KSE index has gained close to 400% since 2009, and 40% this year alone—leaving neighboring markets in the dust.

Pakistan’s equities have had a number of things going their way, like an improving macroeconomic environment—rising economic growth and falling inflation and interest rates. The country’s economy grew close to 6 percent in 2016, up from 4.8 percent in 2015, with inflation running around 4 percent, down from 10 percent four years ago. And the 10 year Treasury bond has yielded 8 percent, down from 12.5 percent four years ago.

Then there are a couple of overseas endorsements for Pakistan’s market reforms. Like $1 billion in support from the World Bank – and a couple of domestic acquisitions from foreign suitors, such as the acquisition of Karachi’s K-Electric by Shanghai Electric Power Co.
Another overseas endorsement was the inclusion of Pakistan’s market into MSCI’s emerging market index.

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