Pakistan Stock Exchange’s (PSX) benchmark KSE-100 index shed 1,250.07 points on Monday, a day after the President, in a controversial move, dissolved the National Assembly, leading to political uncertainty in the country.
The Pakistani rupee also lost value against the US dollar following President Arif Alvi’s decision to dissolve the lower house of Parliament on the recommendation of Prime Minister Imran Khan, who was expected to lose a no-confidence vote.
The market fell over 700 points immediately after the opening bell, sliding further throughout the day to close 1,250 points or 2.77 per cent, in the red at 43,902.
During the 5 sessions, the rupee lost nearly 1.3 per cent to end at 184.09, according to the Business Recorder web portal.
Cement, commercial banks, technology and communication sectors were the major losers of the day, Mettis Global, a web-based financial data and analytics portal, said.
In a dramatic move on Sunday, Prime Minister Imran Khan survived a dishonourable exit when National Assembly Deputy Speaker Qasim Suri stalled the no-confidence motion tabled against him.
Khan, who was later on Sunday removed from the post of the Prime Minister, had advised the dissolution of the National Assembly and called for election. Khan is now the caretaker Prime Minister until the President appoints a new caretaker Prime Minister.
To complicate the political situation, the Supreme Court has taken a suo moto cognizance of the situation and is expected to issue a short order by Tuesday on the legality of the speaker’s move and dissolution order of the assembly.
“I am not surprised at the stock exchange index losing points because right now no one knows who is running the economic policies and what is to become of the IMF bailout package’s remaining amount,” financial analyst Qasim Nawaz said.
Nawaz, whose company evaluates investment opportunities and risk management for its clients, said that until there was no clarity on what will happen in future the economic/financial market will not push up.
Intikhab Alam at Topline investments securities said the depreciation of the rupee in the intra-bank and open market had also not helped matters.
“The rupee has been gradually depreciating against the US dollar because of different factors and it was hovering around 183 rupees today,” he said.
Asked what were the other factors which were causing the depreciation of the rupee and uncertainty in the stock exchange, Alam said the external sector had started to lose steam and from July to February FY22, the trade deficit remained around USD30 billion.
He pointed out that although the growth in merchandise exports was 28 per cent, the import growth of around 49 per cent aggravated the trade deficit.
“Despite 7.4 per cent growth in remittances, the current account deficit came in at USD12 billion.” In the week ended March 18, the foreign currency reserves with the State Bank of Pakistan were about USD15 billion covering almost two and a half months of imports.
Last week, the market made substantial gains on account of decline in oil prices with the KSE-100 closing at 45,152.11 points, a week-on-week gain of 1,600.96 points or 3.68 per cent.
It may be noted that Pakistan’s economy is already facing multiple challenges in the form of falling foreign exchange reserves, rising current account deficit and increasing commodity prices, Business Recorder Pakistan cited the brokerage house as saying.
“Timely resolution of the matter and early election will allow the new democratically elected government to take the much needed tough economic decisions,” it said. PTI CORR PY AKJ PY PY
