Stock Market Tragedy – When Investors lost over Rs 618 billion to political madness around Senate Polls

Pakistan Stock exchange (PSX) was devoured in the political madness that was witnessed around Senate polls, which resulted in a loss of over Rs.618 billion to the public, after benchmark kse-100 index crashed nearly 3,351 points from March 4th to March 11th, 2021. The tragedy began, when the investors lost Rs.184 billion on the day, right after, in a shocking upset, Pakistan’s Finance Minister Abdul Hafeez Shaikh was trounced by former premier Yusuf Raza Gilani in the crucial Senate elections on Wednesday, in a major setback for Prime Minister Imran Khan who had personally campaigned for his Cabinet colleague. The ruling Pakistan Tehreek-e-Insaf Party (PTI) had claimed that it enjoyed support of 182 members while 172 votes were needed to elect the senator. However, “Yusuf Raza Gilani got 169 votes while Shaikh got 164 votes. Seven votes were rejected. Total number of polled votes was 340,”the Election Commission of Pakistan (ECP) announced. The political uncertainty wreaked havoc at the stock market, as following a senate upset, market participants speculated over government’s receding command over its legislators. The speculation mounted, amid dirty games of political power play which was reflected in a leak of a controversial video showing Gilani’s son Ali Haider Gilani instructing someone (possibly sold out legislators) on how to waste a Senate vote. Though the video was a dramatic last-minute twist to the Senate election saga, it reflected the season of horse-trading, vote-buying, threats and engineering that haunt every upper house poll – a continuation of an unsavoury tradition that favours personal gain over party stance or the welfare of very people who voted these “auctioned” lawmakers to the corridors of power. However, the market pared some losses on Friday, and recovered nearly Rs.70 billion at the benchmark index, over indications of relative certainty at the political landscape, after Prime Minister Imran Khan, right after the Senator upset, during a televised address to the nation announced, that he would obtain a vote of confidence from the National Assembly on the following Saturday. Prime minister took this decision to dispel the impression as portrayed by the opposition that he had lost confidence of the National Assembly Investors, however, began the following week with another loss of about Rs.109 billion at the index on Monday, when market bears swept off investors’ sentiments owing to panic sell-off. Political upheaval, sent investors to jitters, when the ‘Vote of Confidence’ won by the Prime Minister Imran Khan, was termed rigged by the opposition leaders, who also casted doubts over the credibility of the entire constitutional process after the PM was accused getting of agencies’ help to ‘rope in’ the ruling alliance’s parliamentarians for getting their votes. The ruckus at the political theatre sent Mutual Funds towards redemption, which offloaded about Rs.1.5 billion worth of shares on just a single day. From Monday to Thursday, the index witnessed a horrific bloodbath, when investors booked a net loss of about Rs.545 billion, during which even the YTD (Year-to Date) return on benchmark index also turned negative for the first time in Calendar Year 2021. The continuous uncertainty at the political landscape also led the index to touch its 63 sessions low and breaching 43,000 level. Thursday was the last day of the consecutive loss making sessions at the index, as investors also liquidated their holdings ahead of the Senate Chairman election which was due to be held on Friday, speculating another upset. On Friday, March 12, however, the index witnessed a sharp recovery of Rs.145 billion and halted the rampage, over market’s excitement for the senate chairman election, and investors’ anticipation of a possible victory for the government. Following the session’s closing, in a Senate race that saw a fair share of controversy, both government-backed candidates Sadiq Sanjrani and Mirza Muhammad Afridi won to clinch the posts of chairman and deputy chairman. The market trembled, bled and billions were lost while politicians and champions of democracy were pulling off stunts in greed to fulfill their uncontrolled ambitions. The accidental politicians of ‘revolution’ and ‘Change’ were aloof of the cost the public paid; during their power grabbing dirty games, but questions must be asked. Who will be held responsible for the billions wiped-off during a preposterous political theater, which descended into madness? Is there any authority which will hold every participant of this political theater accountable? Expectedly, it won’t even matter, since those who lost fortunes were the public. The question must also be asked about a possible misdemeanor and a foul play at the market. If committed, the onus will be on Securities Exchange Commission of Pakistan (SECP) and Ministry of Finance, which failed to keep a check, and create any support mechanism for the market during such crisis.