By Muzzammil Aslam
Market lens are busy capturing the domestic political landscape and partially global equity outlook. Both issues are stopping market to price in the stimulus added by UAE & Saudi Governments, policy tightening, decline in oil prices and introducing export & import substitution policies.
24th December is the day everyone has their eyes on. The two giant political figures Zardari & Nawaz’s future now depends on their judicial verdict on corruption.
Is this something new which is keeping market in doldrums?
Let’s discuss the expected judgement scenarios for both first
1- Both will get the clean chit (highly unlikely)
2- Both will be prosecuted (likely)
3- Arrest orders and sent to jail (partially possible).
Zardari already got the bail till 7th January, even if he will be convicted, he will not be arrested and will get time to file appeal. But Nawaz will definitely be sent to jail.
Let’s assume the worst case scenario both arrested and sent to jail.
What will happen? Nothing will happen apart from noise and may prompt PMLN & PPP to combine and work as joint opposition.
There is a big difference between last time when Ex-Prime Minister Nawaz Sharif was disqualified and sent to Jail than this time. At that time, PMLN was in power and all decision making and running government affairs were put to halt. Senior leadership of PMLN were busy with courts and the leadership crisis. This time government operations will not be halted unless there is proper plan for agitation or sit-in on roads. The latter seems difficult to mobilise especially when the senior leadership is behind the bars.
Whichever way the decision will swing, hopefully, market will eventually focus too return on macros.
As far as macro is concern, the situation has shifted from day-to-day to Month-to-Month, especially after UAE’s willingness to inject $3 billion. Market would love to see government to enter in IMF program and halt of global equity sell-off.
Surely, we keep our opinion intact, Pakistan macros are changing especially with the mammoth decline in oil prices and this is decoupling us from global macros.