Some analysts are predicting that Pakistan will default on the payments. This is all thanks to the cacophony created by the newly elected politicians. Instead of getting down to the business of people, these dimwits are running up and down the CJ tree.
They may succeed in bringing back CJ and ousting Musharraf. Will that help improving the economy? No.
Economy will continue to get worse, and all that big mandate will be gone. People will then start saying Musharraf bara acha tha.
On the American front, democrats are putting squeeze on Pakistan’s funding. These internal and external shocks to our economy will be really bad.
I hope Pakistani political leaders come to their senses and soon.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aAesZd_OOjXQ&refer=home#
**Pakistan Stocks Close Near Nine-Month Low on Political Concern **
By Farhan Sharif and Naween A. Mangi
May 29 (Bloomberg) – Pakistan’s stock index closed near a nine-month low amid concern investors will renege on payments for shares after prices dropped as much as 23 percent this month.
The measure, the worst performer this month among 89 major indexes tracked by Bloomberg, is on course for the largest drop since May 2000.
A group of stockbrokers flew to the capital, Islamabad, last night to persuade Asif Ali Zardari, head of the main party in the ruling coalition, to take measures to bolster sentiment. Foreign investors have become net sellers as Zardari seeks to curb the powers of President Pervez Musharraf, whose rule since October 1999 boosted the benchmark almost 10-fold.
We went to Zardari with the hope that the government will take immediate confidence-building steps,'' Aqeel Karim Dhedhi, chairman of AKD Securities, among the biggest brokerages, said by phone from Karachi. A committee of 15 or so people has been formed and we hope for investor-friendly measures to regain confidence since the market is in bad shape.‘’
Foreign investors had sold a net 13.2 billion rupees ($195 million) of shares this month as of May 17, according to the central bank’s Web site.
The Karachi Stock Exchange 100 index closed 0.2 percent lower at 12,235.05 after dropping as much as 4.5 percent to a 13-month low. Stocks rose later in the day amid speculation state-run funds became buyers to benefit from lower prices.
Institutions, including those owned by the government, came in to buy shares which had fallen to attractive levels,'' said Atif Malik, a research analyst at JS Global Capital Ltd. That’s what led to the noticeable recovery later in the day.‘’
`Confidence-Building’
As many as 100 Pakistani investors and brokers gathered at the Karachi Stock Exchange, shouting anti-government slogans outside the trading hall and in the parking lot to protest against the decline in share prices.
Brokers and investors are concerned the government will resist appeals to keep a capital gains tax exemption on shares in the June 7 national budget. Investors don’t currently pay a tax when the value of their shares rises. The exemption was granted in 1975 and has since been extended every few years.
Pakistan Peoples Party has always been business friendly,'' Zardari said in an interview with GEO TV today after meeting the brokers. We understand the challenges and we have all the solutions.‘’
Customers have two days to pay for stocks after purchases, according to Karachi Stock Exchange rules, causing concern the rapid decline in values may prompt them to fail on payments, causing their brokers to default as well. In addition to sliding share values, investors have to pay higher interest rates on any debt incurred in order to trade stock.
The State Bank of Pakistan increased the benchmark rate for the second time this year, effective May 23. The central bank raised the discount rate at which it lends to commercial banks by 1.5 percentage points to a six-year high of 12 percent to curb inflation.
`Severe Crunch’
An increase in the cost of borrowing money to buy shares to 24 percent from 14 percent a few days ago'' has hurt liquidity, said Imran Khan, head of research at First Capital Equities in Karachi. Worries about the imposition of a capital gains tax are also weighing on investors.‘’
The stock index is also declining because of speculation Musharraf has decided to resign, said JS Global Capital’s Malik. Musharraf may resign within 48 hours, GEO TV reported today. Rashid Qureshi, a spokesman for Musharraf, denied the report.
Zardari, co-chairman of the ruling Pakistan Peoples Party, May 29 sought support from former Prime Minister Nawaz Sharif’s faction of the Pakistan Muslim League for constitutional amendments to transfer powers to the government from the president, Ahsan Iqbal, a spokesman for Sharif’s party, told reporters after the meeting in Islamabad.
Two-thirds of lawmakers can approve the proposed constitutional change to end Musharraf’s right to dismiss parliament and appoint Supreme Court judges.
To contact the reporters on this story: Farhan Sharif in Karachi at [email protected]; Naween A. Mangi in Karachi at [email protected]
Last Updated: May 29, 2008 06:58 EDT
I guess the crisis started months before they came to power for some reason