THE national political scenario emerging after Saturday’s general elections seems to have energised Karachi’s stock market. On Monday stocks crossed the 20,000 point mark for the first time and the rally continued on Tuesday as the KSE-100 index gained 229 points. While investors’ confidence in the post-election set-up is understandable, the KSE’s performance is still surprising considering the country’s generally morose economic situation. Two things are clear: investors are feeling positive because a stable PML-N government is likely to take the reins in Islamabad as opposed to earlier fears of a split mandate, while the business community has a soft spot for Nawaz Sharif, considering him a pro-market politician. There are also other factors responsible for the stock market’s impressive recent performance. Market watchers point out that most of the investment has been foreign; in the first four months of the current year over $200m of foreign funds have been pumped into the KSE while locals have mostly been selling. Also, while the rise indicates positive trends, it is a tad misleading as the weightage of certain stocks is relatively high. The amnesty granted by the government last year whereby no questions would be asked of investors about the source of funds till 2014 is also said to be responsible for attracting liquidity to the market, though some may have used the amnesty to launder money.

Regardless of the ups and downs of the stock market investors have positive expectations of a Nawaz Sharif government and it is hoped the PML-N will take tough, bold decisions to put the economy back on track. Foremost amongst the challenges the incoming political government must address are circular debt, the energy crisis and tax reform, while the market requires a stable law and order situation to do business.