The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 index shed more than 500 points on Wednesday as clashes between PTI protesters and police officials in Lahore dampened investor sentiment.
According to the PSX website, the KSE-100 index had gone down by 572.63 points, or 1.37 per cent, by 12:35pm.
Ahsan Mehanti of the Arif Habib Corporation said the stock market was witnessing a slump due to the central bank’s decision to hike the key interest policy rate and the political instability.
“Stocks fell across the board on investor fears over the impact of the opposition’s protest call to initiate fresh elections and massive State Bank of Pakistan policy tightening this week,” he said.
“Domestic and foreign investors are withdrawing their capital from the market. Political matters have deteriorated to such an extent that the market has not improved despite Saudi Arabia’s announcement regarding the extension of the kingdom’s $3 billion deposit to Pakistan,” he said.
He added that reports of a delay in the resumption of the International Monetary Fund (IMF) programme and falling rupee played a catalyst role in the bearish activity.
Raza Jaffrey, head of research at Intermarket Securities, said that equities continue to come down with the “risk of confrontation on the streets very much playing itself out”.
“The balance of payments situation remains precarious as before. Everything looks cheap but the market has been akin to a falling knife this month. Investors are waiting for the dust to settle before entering equities again,” he said.
Meanwhile, Salman Naqvi of Aba Ali Habib Securities attributed the slump in the market to the high interest rate and the fall in the value of the rupee.
“If we do not get the bailout package from the IMF, then the market could go down further.” He said that investors were also being cautious over the possibility of heavy taxes being imposed in the upcoming budget.
“Investors are also prioritising selling shares due to the possible law and order situation that could arise out of Imran Khan’s long march call,” he said.