Importance Of “Perception” In Capital Markets.

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Nowhere does perception play a bigger role than Stock Markets. Nowhere. Why ? Because stock markets are an indication of what is to happen in the next 6 to 9 months. No market gains or gives away its direction based on today. It is always about the future. Future of how the earnings will be, future of how stable the economy will be, future of how the expansion of a company will take place, future of how a new product will be launched by any company— future in the present in Capital Markets.

That is why in developed markets people always say that the stock market is an indication of what the masses think about the future of the financial world. In stock markets, like any other investment, you buy the future. With the anticipation of profits which are tied to the future.

In 2017, investors around the world and in Pakistan thought that the future of the Pakistani markets was not going to be bright. Thus it lost 17000 points in a year from its peak. But why did not it recover ? Because the future kept looking bleak when it came to economic outlook. And this holds true till today, as we speak.

Investors are not convinced, or at least the ones who know the world of finance completely, that our economic situation will get better within the next 6 to 9 months. And THIS PERCEPTION of the future needs management.

If you could manage perception then you can, to a major extent, manage the markets. Or at least till the policies of the government start to show fruits.

But what I see is that nobody is ready to manage perception in the markets today from the Government’s side. And on top of that, they are hurting the perception by making wrong statements. Wrong not as in deceptive, but wrong as in uncertainty. The government needs to address the uncertainty. Announce concrete steps instead of “We expect…” or ” Insha Allah all will be better…” type of statements.

And to manage perception, you have to convince the masses. And to convince the masses, you need a concrete plan of actions with concrete timelines so the masses can monitor and gauge the progress.

Economy not only needs to be fixed. It needs to be seen getting fixed. Just like justice not only needs to be done but justice needs to be seen while being done. And we do not have much time to manage perception. If perception turns into disappointment, there is no turning back around.

Because in reality, disappointments in the financial markets are created by delays in delivery. It is as simple as that.

Author: Mir Mohammad AliKhan

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