Pakistan shares back on track

Fear exists that an influx of refugees could strain Pakistan's economy

Investors have started to reinvest in Pakistani stocks, buoying the key share index to levels not seen since before the 11 September attacks.

The country's main index fell by more than 9% in the three days following those attacks, forcing regulators there to close all three of the country's bourses.

Now, the Pakistani government's alliance with the US is encouraging both foreign and local investors to put their money back, in the belief that stocks are now at bargain prices.

The Karachi Stock Exchange's 100-share index reached a high of 1,257.49 points on Wednesday.

Roadmap?

The price rise "has been driven by the major political developments of Pakistan aligning itself with the international coalition", Mudassar Malik, director at BMA Capital told the BBC's World Business Report.

"That has helped investors tremendously in terms of charting out a future roadmap for recovery."

In return for Pakistan's support, the US has eased sanctions against Islamabad and resumed economic and relief aid.

Foreign investors are estimated to have poured $10-20m into the Pakistani market - an insignificant amount in itself but a catalyst for local investors to return to the market.

Malik's view is that the index should be able to reach levels of 1,500- 1,600 in the next quarter, having hit a high of 1,257 points on Wednesday.

"Pakistan needs to continue its support of the international coalition," he said.

"Multilateral agencies need to come through with the funding needed to fill the gap.

"Other reform measures for law and order need to be maintained [for stocks to remain high]"

Liquid investment?

Falling property prices and the fluctuating price of gold have also made stocks more attractive.

"This is probably the most liquid form of investment that you can make, it is very easy to buy and sell traded stocks. It is very much the game in town," he added.

In Pakistan, the economic situation is made worse by the country's refugee crisis, with thousands of Afghani's trying to cross the borders illegally, hoping to join the millions of refugees already there.

The worry are not so much the military strikes on Afghanistan themselves, but the long-term political and social consequences for Pakistan.