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Capital Markets

Pakistan: Markets stay calm in a crisis

Pakistan has become a country that generates two types of stories: one positively glowing, extolling the recently healthy financial markets and rising foreign direct investment; one wholly negative, after the country’s latest skirmish with one or more of rising militancy, dictatorship, government strife or old-fashioned bankruptcy.

The latest troubles in Islamabad have, rather, oddly, created a new, hybrid strain of the two. This time the country’s president and (for a short while yet) army chief, Pervez Musharraf, who rose to power eight years ago in a bloodless coup, first dissolved the Supreme Court and then imposed martial law, mirroring India’s own Emergency of 1975, when Indira Gandhi dissolved parliament and threw the country’s constitution out of the window.

Yet while the global diplomatic community has rushed to show their distaste for Musharraf’s decision by shaking their heads and tutting very loudly indeed, the broad domestic and global financial community has quietly applauded what they see as his doggedness and determination in adversity. They’ve clearly also decided that an alternative government might be far less market-friendly, and more inclined to backtrack on the financial and economic reforms of recent years.

A Musharraf fan

"I would love to see Pervez Musharraf regain control of both positions [president and head of the military] for five or 15 years in order to get democracy back on track," says Farrukh H Sabzwari, chief executive at KASB Securities in Karachi, the local joint venture partner of Merrill Lynch.

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