pakistan-stock-market-plunges-2300-points-amid-election-uncertainty-imf-delays

With a fractured mandate, allegations of widespread rigging, and political uncertainty in elections, Pakistan’s stock market has plunged by 2300 points, recording the worst figures on Monday.

 

On Friday, the index had plunged by 1200 points over the delay in announcing the results of the general elections; it had settled below 63,000.

 

Director of Research at Chase Securities, Yousuf M. Farooq, said, "Due to uncertain and unresolved political matters in the country, the stock market took a hit over the weekend."

 

He told the local media outlet that "uncertainty is likely to remain in the market till all the political matters are not resolved with clarity."

 

Furthermore, "oil exploration companies faced pressure due to speculation surrounding discussions between the International Monetary Fund (IMF) and the incoming government regarding the resolution of circular debt," he added.

 

On a positive front, he highlighted that remittances reached $2.4 billion in January, alongside an "expected" current account surplus.

He expressed optimism that "this development could mitigate speculative pressure on the rupee and bolster the market shortly."

 

Awais Ashraf, director of research at Akseer Research, added, "Due to the delay in the formation of the government because of the unclear mandate for any party, this also creates panic, fear, and uncertainty among investors."

 

"The possibility of the Pakistan Democratic Movement's persistence raises apprehensions regarding the commencement of more stringent reforms essential for reducing the fiscal deficit," he added.

 

Exploration and production businesses, such as Oil and Gas Development Company (OGDC) and Pakistan Petroleum Limited (PPL), suffered the most as a result of the IMF's delays in approving the circular debt clearance plan, he claimed.

 

According to Shahab Farooq, director of research at Next Capital Limited, the PSX opened in the red with weak sentiment because "investors prefer to be on the side-lines for now.”

 

He cited "persistent uncertainties" surrounding the formation of the next government, expectations of a "weak coalition government with a "strong opposition, “the fall in Pakistan's international bonds, and the IMF's "red flag" regarding the proposed circular debt reduction plan as reasons for the losses.

 

"Early formation of a government with a focus on economic challenges is likely to rebuild investor confidence in a market trading at attractive valuations," he said.

 

According to Mohammed Sohail, CEO of Topline Securities, equities fell 1,000 points due to "coalition government uncertainty and news of a delay in the resolution of the circular debt management plan.”

 

On Friday, equities ended the chaotic three-session election week on a sour note, as the "unusual delay" in revealing election results raised investor concerns about a seamless transition to a stable political regime.

 

As a result, the KSE 100-share index experienced further selling pressure, closing the short week below 63,000.

 

On Friday, shares plummeted like a house of cards, with the index dropping by 2,300 points intraday as an unusual delay in election results sparked frenzied selling.