Home / Business / PSX mimics global markets, plunges 652 points in early trade

PSX mimics global markets, plunges 652 points in early trade

The Pakistan Stock Exchange (PSX) opened the week in the red on Monday, with the benchmark KSE-100 index shedding points shortly after trading began.

By 10:46am, the benchmark had lost 652.13 points, or 1.53 per cent, to reach 41,939.38 points.

Head of Research at Intermarket Securities, Raza Jafri, said the KSE-100 index was affected by the performance of equities globally.

“Asian markets are sharply lower today, following the heavy 3pc decline in US markets on Friday. This is playing out at the KSE-100 also.”

Jafri said that while the resumption of the International Monetary Fund (IMF) was imminent with its executive board set to meet today, the market was also wary because of the floods and the political situation.

On Friday, US central bank chief Jerome Powell said the US Federal Reserve will raise rates as high as needed to restrict growth, and would keep them there “for some time” to bring down inflation that is running at more than three times the Fed’s 2pc goal.

An index of global stock markets fell, while short-term US Treasury yields rose after Powell’s speech, Reuters reported.

MSCI’s gauge of stocks across the globe shed 2.47pc on Friday, its worst day in more than two months.

“Stocks [at the PSX] witnessed bearish activity ahead of crucial IMF meeting for the revival of bailout package amid escalating political tensions,” Ahsan Mehanti of Arif Habib Corporation commented today.

He added that the slump in global equities, “dismal reports” about the current account deficit in July, the rupee’s fall and taxes levied ahead of the IMF meeting had contributed to the bearish trend.

First National Equities Limited Director Amir Shehzad said the primary reason for the stock market’s fall was Khyber Pakhtunkhwa Finance Minister Taimur Khan Jhagra’s letter to Federal Finance Minister Miftah Ismail in which he conveyed his administration’s inability to provide a provincial surplus this year, a key requirement previously agreed upon for the revival of the IMF programme.

The market was wary that the IMF’s executive board would not approve the release of the loan tranche because of the letter, he said. “If the IMF does not approve the resumption of the programme, you could see a freefall in the stock market.”

However, Shehzad said he believed that this would not happen.

In addition to the IMF-related apprehensions, the market was also watching the losses caused by the floods sweeping the country, he said.

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