KARACHI: Pakistan Stock Exchange (PSX) Tuesday crashed to a two-and-a-half-year low as worsening political uncertainty triggered a massive selloff.
The KSE-100 Shares Index, the benchmark of the country’s capital market, lost 1,378.54 points or about 3.47%, to close at 38,342.21 points.
Analysts say the dissolution of the Punjab Assembly and the prevailing crisis in the country amid continuous demand from Pakistan Tehreek-e-Insaf (PTI) for snap polls panicked the market into this vicious selloff.
The delay in the revival of the International Monetary Fund’s (IMF) loan programme and the ongoing political uncertainty in the country caused the bloodbath in the stock market.
The Shehbaz Sharif government has been under pressure to revive the IMF programme but the “harsh conditions” set by the Washington-based lender have made it almost impossible for the country’s financial managers to proceed.
Meanwhile, the depleting forex reserves with the State Bank of Pakistan below the $5 billion mark — enough for less than three weeks of import — is making the investors jittery.
Talking to Geo.tv, Tahir Abbas, Head of Research at Arif Habib Limited, said the investment momentum was extremely negative.
The analyst pinned Tuesday’s tailspin partly on the IMF loan impasse and partly on the political crisis.
“Players are unable to see any efforts made by the government to resume the programme due to which they are not taking fresh positions,” he said.
Abbas added that news reports suggesting that the Khyber Pakhtunkhwa assembly would be dissolved today further dented investors’ sentiment.
On Monday, the PSX began another week on a bearish note with the benchmark index plunging over 600 points as the market reacted to the repercussions of political uncertainty.
In the backdrop of a worsening political scenario coupled with poor economic data, the index fell below the 40,000-point mark.
Political instability in the wake of the political tug-of-war-for-power in the country coupled with the Punjab assembly dissolution and local body elections in Sindh impacted the investment climate.
Moreover, concerns regarding monetary policy rate hikes, depreciation of the rupee against the US dollar, and delay in the ninth review of the International Monetary Fund (IMF) programme further dented investors’ sentiment.