PAKISTAN DAY: TIME TO RECKON.
Byline: SHABBIR H. KAZMI
Pakistan Day is celebrated with great fervor every year, but this year the circumstances are very different. People are living under extreme fear due to coronavirus pandemic, not only in Pakistan but around the world. The death of dozens of people from the pandemic, reminds us hundreds and thousands of people, who were assassinated after the partition of subcontinent. This also reminds the helplessness and the difficult administrative and financial conditions prevailing at that time.
At that time Pakistan emerged strong only because people were united and had the resolve. Around this time the country has a robust administrative structure, financial conditions are strong and above all people also have the determination to overcome this pandemic. On top the multilateral institutions as well as the lender of last resort, International Monetary Fund (IMF) are willing to support the countries under distress. Since the economic activities have been reduced to the lowest level, the first and far most effort should to ensure ample availability of daily consumables and not to go for panic buying or hording. It is time to show that we, as a nation, care for under-privileged people.
People look towards those at the helm of affairs to come up with extraordinary measures because the circumstances are extraordinary. The urgency of swift, drastic and extraordinary monetary policy response to minimize the adverse affects of pandemic has increasingly roiled investor sentiment. Both the severity and drastic nature of the shift from a bull to bear stock market have caught investors off-guard with the benchmark mark index of Pakistan Stock Exchange (PSX) losing almost one-third of its value from its CY20 high of 43,218 points seen only two months ago.
The downslide is firmly centered on the period since the first confirmed cases of in Pakistan. A snapshot of operational and profitability impacts over the market indicates negative spillovers for Banks, EandPs, Cements, Textile Composite, OMCs and the Auto space constituting a cumulative 47% of the Index weight. Out of sync with global central banks vis-a-vis aggressive quantitative steps, the State Bank of Pakistan (SBP) has reduced the policy rate by a modest 75bps. At the same time, adjustment in the interest rate corridor renders the 75bps cut to just 25bps on the savings rate provided by Banks - a clear negative for the earnings of the heavyweight sec tor.
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