Investigation of Political Chaos and Performance of Pakistan Stock Exchange: A Case of KSE 100-Index

Abstract

The Stock market is a crucial element of any financial system, and it plays a significant role. It is observed that the stock market's performance is an important indicator of the economic health of any country. Pakistan stock exchange deals with bonds, Shares, debentures, options forwards, etc., that may be affected due to any news and events directly or indirectly. This study explores the effect of certain political events on the stock market performance from 2000-2022.

The major events selected for this study regarding political chaos include the assassination of Benazir Bhutto, restorations of judges, rigging in the general elections, Regime changes, long marches, etc. Data was collected from Pakistan magazine NGOs regarding the KSE-100 index, and selected political news/events were identified based on websites, magazines, newspapers, etc. Findings indicate that most of the selected events of political chaos resulted in a negative impact on the performance of the stock market (KSE-100 Index). This study is helpful for various stakeholders, i.e., government, financial institutions and non- financial, SECP, policymakers, and domestic and global investors, practically and theoretically.