Bears grip Pak index after JIT report
karachi — Pakistan’s key stock index on Tuesday slumped the most in more than 8 years after a probe set up to investigate Prime Minister Nawaz Sharif’s wealth said it found evidence of possible corruption, plunging the country deeper into political crisis.
The Supreme Court is due to review findings that Sharif was unable to account for the disparity between his wealth and known sources of income, and will convene a hearing on July 17. If the court accepts the charges, it may lead to Sharif’s resignation or removal from power under the constitution.
“There exists a significant disparity between the wealth declared” and the means through which he generated income, according to a report by investigators appointed by the Supreme Court in April. The investigators submitted their report to a panel of justices, who ordered the report be made public on Monday. If an accused cannot account for his sources of income, “the court shall presume, unless the contrary is proved, that the person is guilty of the offence of corruption,” the report reads.
Pakistan’s benchmark KSE-100 Index declined 4.7 per cent at close in Karachi, the most since February 2009 and the biggest loser among stocks globally. The report turned out to be more damaging than expected and investors will remain confused amid the biggest political crisis since the government took office in 2013, said Faisal Bilwani, head of equities at Elixir Securities Pakistan Pvt.
Removal of the prime minister from power could impede an economy which is growing its fastest in a decade. Sharif, who has pledged to step down if found guilty of graft by the court, has denied any wrongdoing.
Pakistan’s economy grew 5.3 per cent in 2016, it’s highest in 10 years, after Sharif averted a balance-of-payment crisis in 2013 with help from an International Monetary Fund (IMF) loan and Chinese infrastructure and energy financing. The country’s benchmark stock index has plunged about 10 per cent since it was included in the MSCI’s emerging markets index in June.
“The PM being investigated for graft. Normally that’s a good investment opportunity when the markets fall due to political noise,” said Carsten Hesse, a Londonbased emerging-market equity strategist at Berenberg Bank, which doesn’t cover Pakistan.
“That’s long term very positive as it will help the country to fight corruption and the next leader might not accept graft. We see the positive impact of a corruption investigation in Romania.”
Politicians in the country have long been accused of corruption and have often been thrown out of power on charges which may have been hard to prove in court. Pakistan ranks at 116 out of 176 countries in Transparency International’s 2016 corruption perception index. — Bloomberg