The Pakistan Stock Exchange (PSX) came under intense selling pressure on Monday amid depleting foreign reserves, as the benchmark KSE-100 index shed around 1,500 points.
According to the PSX website, the KSE-100 Index opened at 44,840.81 points and started its slide after gaining slightly to 44,841.41 points. The stock exchange took brief corrections but ultimately continued with its downward trajectory with the benchmark KSE-100 index down 1,447.67 points, closing at 43,393.14 points.
Balance of payment crisis could be a reason
Experts said Pakistan’s balance of payment crisis pushed investors to sell part of their holdings at the PSX. Raza Jafri, head of Equities at Intermarket Securities, said the market was bearish mainly due to depleting foreign reserves and a delay in the restoration of the International Monetary Funds program (IMF) among other factors.
“The government has seemingly, so far, drawn a blank when it comes to securing funds from friendly countries. The pressure in global equity markets is also hurting sentiment,” Jafri elaborated, cautioning that the market performance would depend mainly on the foreign reserves in the shorter run, so, any positive developments on this front could help halt the slide.
Shahbaz government’s failure to acquire fresh bailout packages
The country has not succeeded in acquiring any fresh bailout packages from friendly countries, including Saudi Arabia and UAE, during Prime Minister Shehbaz Sharif’s recent visit.
CEO of Alpha Beta Core, Khurram Shehzad, was also of a similar opinion.
“No development on funding from Saudi Arabia, UAE and the IMF has worried investors,” said Shehzad, adding that the reluctance of the Shehbaz government to continue with the petrol subsidy could also be a reason for the “PSX bloodbath”.
“The risk of interest rates rising in the next monetary policy is also propelling investors to exit the equity market,” Muhammad Sohail, CEO at Topline Securities, said.
Rupee continues to depreciate
Meanwhile, the dollar continued its flight towards record levels against the rupee. The greenback was trading at Rs188.5 in the interbank at around noon on Monday after the rupee depreciated by Rs1.25, according to the Forex Association of Pakistan. The open market rate of the dollar was Rs187.8 at the same time.