As political unrest was sparked by Punjab Chief Minister Chaudhry Parvez Elahi’s recommendation to the governor to dissolve the assembly, shares at the Pakistan Stock Exchange (PSX) fell on Friday even as the nation received a $4 billion economic lifeline from the United Arab Emirates and Saudi Arabia.
At 11:36 am, the benchmark KSE-100 index dropped 366.73 points, or 0.9%, to hit 40,437.16 points.
The index “opened under pressure due to the revival of political noise and uncertainty in Punjab politics,” according to Raza Jafri, head of equity at Intermarket Securities. As the UAE joined Saudi Arabia in providing support to Pakistan, he continued, this was overshadowing gains on the international front.
Dalal Securities CEO Siddique Dalal also noted that the expected inflows from UAE and Saudi Arabia should have created bullish momentum but then the advice to dissolve the Punjab Assembly has resulted in the bears dominating.
He predicted that uncertainty will reign after the Punjab Assembly was dissolved and before the Khyber Pakhtunkhwa Assembly. A caretaker government would not be able to negotiate with the International Monetary Fund (IMF) to complete the urgent ninth review, and the federal government would also be obliged to dissolve the National Assembly, he warned.
“There is no consistency,” Dalal said, adding that some profit-taking was also anticipated because it was the final trading day of the week. Any gain is not sustained, and the market is unable to sustain strong momentum.
The UAE had already agreed to give an additional $1 billion and roll over $2 billion in loans that were scheduled to be repaid in February and March.
Separately, in Islamabad, the Saudi Fund for Development (SFD) signed a contract to finance $1 billion in oil imports with deferred payment.
On Thursday, the central bank’s reserves fell to a critical $4.34 billion level, the lowest level since February 2014 and just enough to cover less than one month’s worth of restricted imports.
However, the rollover now gives the authorities a chance to restart the IMF program over the next few days, gradually rebuild foreign exchange reserves, and lift a strict import control that has crippled the manufacturing sector and caused a lack of necessities. However, as the nation’s economic problems worsen, concerns about prolonged political unrest have been raised in response to Punjab CM Elahi’s formal recommendation to the governor to dissolve the province legislature.
Elahi’s action put an end to weeks of legal fighting, public spectacle, and rumors over whether or not the Punjabi government’s allies, the PTI and PML-Q, would dissolve the legislature. The dissolution of the assembly, which served as the voice of millions of people, was described as a difficult choice that Punjab Governor Balighur Rehman would make “with a heavy heart.”
The KP Assembly would also be promptly dissolved, according to PTI leader Fawad Chaudhry, and elections would take place across the country in both provinces. He advised the PDM government to exercise caution, choose an electoral system, and move toward holding national elections in order to assist the country in achieving political stability, which leads to economic stability.