An uncertain PSX

Returns in the stock market have either barely beat inflation or been outright negative for six consecutive years. A portfolio of investment — left untouched since the end of 2016 in the top 100 companies of the stock market — would’ve shrunk by more than 15 per cent in absolute terms over the last six years. Will 2023 be any different? According to Arif Habib Ltd CEO Shahid Ali Habib, two “events” will determine the stock market performance going forward. “A successful review by the International Monetary Fund (IMF) of the loan programme will give us economic certainty. A peaceful election will introduce political certainty. A lot depends on these two events,” he told Dawn in an interview. Hardly a day goes by when stock market analysts don’t blame political instability for the persistent downward swing in share prices. Even if the election took place earlier than October 2023, there’d still be no guarantee of the political turmoil subsiding in the absence of an absolute majority by one party in parliament. No wonder cautious optimism is the guiding principle on I.I. Chundrigar Road. “We expect the index to touch 49,300 points by December,” said Mr Habib with respect to the benchmark of share prices that closed 2022 at 40,420 points. In other words, his brokerage expects share prices to gain nearly 22pc on average in the new calendar year.