On Monday, shares at the Pakistan Stock Exchange (PSX) began down as the KSE-100 index, which serves as a benchmark, dropped below the 40,000-point threshold. The downturn was linked by analysts to both political and economic unpredictability as well as a predicted rise in the policy rate.
At 1:48 pm, the KSE-100 index was down 528.71 points, or 1.31 percent, to 39,794.74 points.
Increasing political commotion and investor worries about the nation’s poor foreign reserves, according to Topline Securities CEO Mohammad Sohail, are to blame for the decline in share prices.
Ali Malik, the chief executive officer of First National Equities Limited, observed that due to political and economic instability, trading volumes were extremely low and there was no buyer interest.
In addition, he blamed the downturn on forecasts that the Monetary Policy Committee of the central bank will hike interest rates by 1-2 percentage points at its next meeting, which would hurt business profitability.
The market is in a panic. The dissolution of the Punjab Assembly and the talk of introducing a motion of no confidence against Prime Minister Shehbaz Sharif are the key reasons why it isn’t stabilizing, according to former PSX director Zafar Moti.
He continued by saying that share prices will also be negatively impacted by an increase in the benchmark interest rate. He also brought up the situation at the ports, where import containers have been detained for weeks as a result of restrictions put in place by the central bank to stop the flow of dollars during the severe cash shortage.
“We cannot see the economy improving in the future and the political crisis in worsening,” he said.
Khurram Schehzad, CEO of Alpha Beta Core, agreed with Moti’s assessment and claimed that a lack of clarity prevented him from seeing many improvements in the near future.
Once the ninth review of the International Monetary Fund was over and foreign inflows were apparent, he suggested, the stock market might rise once more. Despite attractive values, he observed, “the sentiment is very negative, and despite attractive valuations, investors are passive despite attractive valuations, investors are passive in spite of attractive valuations
Political unrest resulted in the KSE-100 index closing 684 points lower last week after Punjab Chief Minister Parvez Elahi publicly recommended to the governor dissolving the state assembly. On Saturday, the Punjab Assembly was dissolved, but the caretaker chief minister has not yet been chosen.
Mahmood Khan, the chief minister of Khyber Pakhtunkhwa, has stated that on January 17, a summary for the dissolution of the provincial assembly will be delivered to the governor (tomorrow). He declared that general elections would soon take place in the nation and predicted that the PTI would win handily.
The State Bank of Pakistan’s (SBP) reserves have dropped to $4.34 billion, their lowest level since February 2014, as the country’s FX crisis has gotten worse.
The nation has been experiencing a severe dollar shortage, which is having a negative impact on the ability to import even food and industrial raw supplies. The country doesn’t have enough dollars, according to the most recent position of foreign exchange reserves, to pay for even one month’s worth of typical imports.
