Early trade on Thursday saw a more than a 600-point decline in shares at the Pakistan Stock Exchange (PSX), with analysts blaming the ninth review of the International Monetary Fund (IMF) and growing political unrest for the decline.
At 10:21 am, the benchmark KSE-100 index was 41,124.12 points after losing 613.5 points, or 1.47 percent.
According to Raza Jafri, head of equity at Intermarket Securities, market sentiment was negative due to concerns that the distribution of the IMF tranche would be postponed until next year.
Pakistan began an IMF program in 2019, which was later increased to $7 billion.
The program’s ninth review is still pending, and the government and IMF are negotiating over the phone to disburse $1.18 billion.
On November 18, Pakistan and the IMF held a round of negotiations but were unable to agree on a timetable for formal discussions on the past due ninth review.
The meetings, which were initially scheduled for the final week of October, were moved to November 3 and then continued to experience delays due to discrepancies in the two parties’ estimates.
Jafri added, “Valuations are certainly cheap but there could be residual pressure from redemptions today, with tail-end flows shifting towards fixed income.”
Amir Shehzad, a director at First National Equities Limited, stated that political unpredictability was the main cause of the downturn.
“There are a few reasons [for the fall]. One is [PTI Chairman] Imran Khan’s statement that he will announce on the 17th when he plans to dissolve the [Punjab and Khyber Pakhtunkhwa] assemblies. Consequently, there is a lot of political uncertainty due to which there is immense pressure on the market.
“Secondly, the issues with the IMF have not been resolved yet,” he said, adding that talks of default were also affecting market sentiment.
The PTI intends to wrap up its protests as part of the “election karao, mulk bachao” campaign by Friday, and on Saturday hold a “large” public gathering in the provincial capital where party chief Imran Khan will reveal his “final” dissolution plan for the two provincial assemblies that his party currently controls.
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