Shares on the Pakistan Stock Exchange (PSX) fell for the second consecutive day on Tuesday following political and economic turmoil.
The benchmark KSE-100 index lost 1324.45 points, or 3.23 percent, to reach 39,646.37 points at 2:44pm.
The CEO of Dalal Securities, Siddique Dalal, said the index fell for several reasons, including fears of dissolution of assemblies in Punjab and Khyber Pakhtunkhwa and rising political tensions that have damaged investor confidence.
Other factors affecting the market are mutual fund repayments at the end of the year, worsening economic conditions, pressure on the rupee, shortage of dollars and the delay in the completion of the ninth round of the International Monetary Fund’s (IMF), he added.
“All these things are making the market down and there is no hope of improvement in the future,” said Dalal.
“Many factors have accumulated, including the lack of a dollar, but the main reason is political uncertainty and the impending shutdown. [two provincial] meetings. There is pressure on foreign reserves as well,” said First National Equities Limited Director Amir Shehzad.
Former PSX director Zafar Moti also admitted that the “obvious” reason for the stock market’s decline was political uncertainty. He also cited incomplete rumors as the reason for the fall.
Moti lamented that unlike in previous crisis times, when senior members of the capital market were brought together by PSX executives to resolve issues and clarify rumours, nothing has happened recently.
PTI chairman Imran Khan announced on Saturday that his party’s governments in Punjab and Khyber Pakhtunkhwa will dissolve their assemblies on Dec 23 to pave the way for fresh elections.
The constitution did not allow the election to be delayed beyond 90 days of the dissolution of the assembly, he said in a video conference with Punjab Chief Minister Parvez Elahi and KP Chief Minister Mahmood Khan by his side.
However, in an attempt to prevent the dissolution, a delegation of PPP and PML-N representatives submitted a no-confidence motion against CM Elahi in the Punjab Assembly on Monday night.
Separately, a no-confidence motion was filed against PA Speaker Sibtain Khan under Article 53 of the Constitution.
Currently, the economic situation of this country is getting worse every day. The State Bank of Pakistan’s foreign exchange reserves are in dire straits, falling by $11 billion annually. In December 2021, the central bank’s reserves were 17.686 billion dollars which now stands at 6.7 billion as of Dec 9, not enough to cover imports.
The gravity of the situation has been overstated as the ninth review of the IMF’s 7 billion program is currently pending and remote discussions are being held between the officials of the Fund and the government to release 1.18bn dollars.
Pakistan has to pay at least 13 billion dollars to foreign stakeholders in the remaining part of the financial year. But it is not clear when it will get more input from the two institutions and from different institutions, which raises fears of default.
The country was already in an economic crisis, facing decades-high inflation and dangerously low rates of forex reserves, when it was devastated by floods that killed at least 1,700 people and caused great damage, estimated at about 30 billion dollars by the authorities, to agricultural land and infrastructure.