Pakistan and Malaysia Bilateral Trade Agreement (BTA): A case of the Pakistan Stock Exchange (PSX) reaction

The goal of this investigation is to establish a connection between the attributes of listed companies and the effects of the Pakistan-Malaysia Bilateral Trade Agreement (BTA) on Pakistan’s stock markets. For that purpose, this research is to look at how the Pakistan Stock Exchange (PSX) was affected by the Bilateral Trade Agreement between Pakistan and Malaysia. The abnormal returns have been computed before and after the announcement using an event study methodology. The results demonstrate that the announcement of the Pakistan-Malaysia (BTA) elicited an immediate response from chosen sectors of Pakistan, with mixed responses, negative as well as positive. Given that the textile industry is one of Pakistan’s top export industries, its response was encouraging. The study concludes that the PSX was vulnerable to this event as well as that this paper has important ramifications for investors and trade policy makers.