Beware The Ides Of March
The Ides of March saw the index of the Stock Market cross 10000 briefly. Let’s be frank about this, what relevance did the inordinate rise in share prices in the past few weeks have with the prevailing economic conditions? The Pakistani stock exchanges are at the moment no better than gambling dens. Can any economist point to anything spectacular that caused the market to rise as much as 400 points day after day? While both the macro and micro economic indicators are looking good, one would expect the common man to get benefit of the much-touted “trickle-down” economics in due course but the share prices (the increases led almost solely by three public sector entities OGDC, PTCL and PSO) were far divorced from reality, at that rate it rose the bubble had to give.
From March 17, 2005 onwards a spectacular downward slide saw the market lose nearly 25% capitalization. None of the “big boys” in the market suffered much, if at all. Why is that not a surprise? What did they know that made them bail out early, leaving many of the small investors holding an empty bag? Small investors have suffered terribly at the hands of hereditary manipulators, their shenanigans should (but will probably never) be targetted by NAB. If the SBP and SECP had not stepped in, the bottom of the market could well have dropped out. Despite injection of Rs 19 billion by financial institutions, institutional investors etc by some blatant arm-twisting, the market went on tumbling, on Monday Mar 28, 2005 by 220 points. The massive infusion of funds finally took effect the following day when the Stock Market index rose about 150 points. By Wednesday Mar 30 the market had risen another 450 points. The government has a responsibility as well as a vested interest in shoring up the market; free market philosophy means that public money has no business intervening, even indirectly.
Real estate prices have registered a fall also, though not as precipitous as the shares index. Property happens to be a far more tangible asset than paper scrips. Reducing their holdings abroad many Pakistani expatriates have been putting their money into a domestic safe haven, the property boom has been fueled both by them and the profit-making cash availability from the stock market. A steady upward spiral would not have been a bad thing, the steep rise in price levels was a tragedy for aspirant homeowners in the upper middle class who should say goodbye to their dreams of buying their dream house. Prices must be dictated by market circumstances and interventions in any form are wrong in the same manner as it would be in the case of the Stock Market. The government must ensure checks and balances, in an wild west environment rife with speculations and where the speculators cannot be brought to task, something must be done to keep them in check. Fall in share prices have brought property prices down 15-20%.
Congratulations are in order for the government negotiating team composed of Ch Shujaat and Mushahid Hussain for having brought the whimsical Bugti Chief to the negotiating table, how long the bonhomie will last is anyone’s guess. Akbar Bugti has agreed to Mushahid Hussain being the neutral member of a three-man Committee to negotiate and subsequently monitor the implementation of a possible accord. Bugti’s kiss of approval may have already compromised Mushahid’s credibility as a neutral, the PML Secretary General may now be susceptible to Bugti’s demands to justify his “neutral posture”. Despite friend Mushahid’s optimism one remains skeptical, notwithstanding the trust and faith he puts in the wily old man, why is the old geezer being generous? Mushahid is right when he says that if we had acted with restraint and maturity on 24 Mar 71, the country would not have spun out of control, 34 years ago almost to the day. However the situation in Dera Bugti has no comparison whatsoever early March 1971. More than a hundred million in East Pakistan were up in arms, here the whole country of over a hundred million are being held hostage by a few thousand. The Bugtis have to be disarmed, hopefully peacefully. Any agreement that allows heavy weapons in private hands anywhere is asking for trouble. The only positive note is that Bugti has himself acknowledged that the overall situation in Balochistan is not his prerogative alone but that of a more representative Baloch forum.
The US decision to sell updated F-16s to Pakistan certainly lifted the morale of all Pakistanis. Anyone with cursory knowledge of defence matters would know that PAF was in an advanced stage of obsolescence despite our vain attempts for rapid indigenization, helped along by our loyally steadfast Chinese friends in all weathers, fair and foul. While the F-16 fleet forms the core of the “air-superiority” mission of the PAF, the three dozen or so still flying were badly outnumbered and outgunned by quality aircraft from the Russian Migoyan (Mig) and Sukhoi (Su) families, French Mirages and British Jaguars, etc in vast numbers in the Indian air inventory. The induction of possibly 48 to 72 F-16s (C&D models) offsets the disadvantage somewhat but to hear the Indians, their sky has fallen in because of these F-16s. The news of their release to Pakistan after 16 years should be worth at last a 1000 real (and not manipulated) points on the Pakistani Stock Exchanges.
The F-16s seemed to lift the doom and gloom of the falling shares index, the performance of the Pakistan Cricket Team in the Bangalore Test confirmed it. If there was ever an inspired team performance, this was it. One could not really single out anyone for praise. More than winning the Test Match were the TV images of the fighting spirit on the field, creating performances above and beyond the team’s stated capabilities. One was disappointed that a number of Indian batsmen did not walk when they knew they were out, the defining moment being Saurav Ganguly refusing to leave the crease even when he was bowled neck and crop by Afridi. If nothing else our Cricket Team has shown that meticulous planning, concentration of purpose and concerted team spirit creates just the environment for an wonderfully combined performance, exemplified by the outstanding aggressive Shahid Afridi. One must also give credit to the great heart of Sami, the fast bowler bowled throughout the day in long and fiery spells. Give him someone like Shabbir Ahmed or Umar Gul on the other end as all fast bowler hunt in pairs. Off course if you want to destroy the team morale one can always bring back Shoaib Akhtar.
My friend, Yousuf Akbari, made my day when he dragged me off last Sunday afternoon to see his “Akbari Autos” stall in the “International Trade and Industrial Fair Asia 2005” at the “Expo Center” Karachi. Mainly engaged in manufacturing and supplying “Leaf Spring” for Original Equipment Manufacturers, the company also makes “Replacement springs” for the local market. Coming from a triangle (Sialkot-Gujranwala-Wazirabad) inculcating tremendous ingenuity in handcrafted metal and leather goods because of the talent passed down through the genes of the armourers of “Alexander the Great’s” (they chose to settle in this area rather than travel any further with the world conqueror), even then the wares on display in the Exhibition was an eye-opener, something to be really proud of. Not many people in the country are aware that such expertise exists, the range of products that Pakistan produces indigenously is simply amazing. If we have put our money where our mouth is, our investors should have chosen to invest in something more tangible, in real manufactured goods rather than paper scrips hardly worth the assets they represent!
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