Political Scandal Makes Pakistan EM Odd Man Out

The political scandal rocking Pakistan, where a Supreme Court investigation found evidence of possible corruption against Prime Minister Nawaz Sharif,  has taken the Karachi Stock Exchange down 17.69 percent from its May high, returning almost -10 percent for the year.   This compares to the iShares MSCI Emerging Markets ETF (EEM), which is up almost 20 percent year-to-date.

The rupee took a big dive on July 5th, slumping 3.1 percent within hours,  its sharpest drop in a single day since 2008, causing panic in south Asia’s-second-largest economy.  There seems to a disagreement on FX policy between the country’s central bank and finance ministry.   The rupee has reclaimed almost all of its losses, however.

The country is struggling with a growing current account deficit,  more than doubling to $8.9 billion between July 2016 and May 2017 due to weak exports and the real appreciation of the rupee.

Nevertheless, according to the Times of India, the fate of the Sharif government may rest on a Microsoft Word font,

On page-55 of the investigative team’s final report submitted on Monday, it says Maryam’s [the PM’s daughter] documents had on them sentences typed in the “Calibri” font which was not available before January 31, 2007, said The Express Tribune report. The documents themselves, though, were from 2006. – Times of India


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