S2 Data -

The stock market is the barometer of the economy that reflects the overall health and direction of the economic development and is affected by different factors including social, environmental and political. It is important to investigate the effect of the political instability on the stock market performance, especially on emerging economies. Therefore, we aim to study the relationship between political instability and stock market performance in Pakistan. To meet our objectives, we used past data from 1996 to 2021. Data are collected from the DataStream data base. MSCI indices are used as the proxy for the Stock market performance of the selected country. World governance six indicators are used in the study as the explanatory variable concentrating the political instability index as the main explanatory variable. Regression analysis is used but two-way robustness analysis was done for the accuracy of the findings through GMM methods and taking GDP as another endogenous variable. Our findings shows that the political stability has significant positive impact on the stock market performance while, political instability has negative impact on stock market performance. Moreover, other governance indicators has a significant positive impact on performance. However, political instability disrupts the operations and economical activities that leads to decrease the investor confidence and also decrease the foreign investment with the increment of the risk in the country. Moreover, our study has some implications for investors to develop the diversified portfolio to minimize the risk and policy makers can increase their foreign direct investment within the economy by controlling the political instability.

股票市场是经济的晴雨表，能够反映经济发展的整体态势与走向，同时受到社会、环境及政治等多类因素的影响。探究政治不稳定对股票市场表现的影响具有重要意义，这一点在新兴经济体中尤为突出。为此，本研究旨在探究巴基斯坦国内政治不稳定与股票市场表现之间的关联。为达成研究目标，我们采用了1996年至2021年的历史数据，相关数据采集自DataStream数据库。MSCI指数（MSCI Indices）被用作所选国家股票市场表现的代理变量。本研究采用世界治理六项指标作为解释变量，其中以政治不稳定指数作为核心解释变量。本研究采用回归分析方法，并通过广义矩估计（GMM）方法、将国内生产总值（GDP）作为另一内生变量开展双向稳健性检验，以确保研究结论的准确性。研究结果表明，政治稳定对股票市场表现具有显著正向影响，而政治不稳定则会对其产生负向冲击。此外，其余治理指标同样对市场表现存在显著正向影响。但政治不稳定会扰乱国内运营与经济活动，进而降低投资者信心，同时随着国家风险攀升，还会引发外商直接投资的缩减。此外，本研究可为投资者提供参考：投资者可通过构建多元化投资组合以降低风险；而政策制定者则可通过管控政治不稳定因素，提升国内外商直接投资规模。