Pakistani Stock Exchange (PSX) experienced a panic-stricken selling spree in the early hours of trade on Monday, amid a severe economic crisis that has worsened since the new government took power.
The benchmark KSE-100 Index fell into the red zone immediately after the opening bell, losing 1,111 points in the first hour of intraday trade.
Khurram Schehzad, Chief Executive Officer of investment firm Alpha Beta Core, stated “PSX is down by about 1,000 points because of uncertainty surrounding the IMF program due to no adjustment in oil prices. The market expected the government to take a firm step over the weekend. Falling short of expectations, the government needs to move fast and take the markets and investors into confidence for future plans, otherwise, the outcomes could be scary.
For instance, international rating agencies could soon downgrade their ratings for Pakistan’s economic indicators, potentially impacting its global bonds, interest rates, and debt-taking ability.”
The market was down 903 points, or 2.08 percent, at 42,583 points at 11:20 a.m. The investors chose to sell their positions after the government decided to keep fuel subsidies in place “for the time being,” violating an overriding pre-condition set by the International Monetary Fund (IMF) for the resumption of its loan program.
The withdrawal of petroleum and electricity subsidies had been made a condition for the global lender to resume its bailout program.
On Wednesday, Pakistan is expected to meet with the IMF mission in Doha for the next round of talks to restart the loan program.
If approved, the influx will assist Pakistan in closing the gap in its foreign exchange reserves and strengthening its balance of payments.
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