Shares plunge 632 points on worries of political instability

Shares at the Pakistan Stock Exchange (PSX) extended losses during early trade on Wednesday, with analysts attributing the downward trend to worries of political instability following the announcement of the PTI’s long march scheduled to begin on Friday.

The benchmark KSE-100 index lost 632.39 points, or 1.5 per cent, to reach 41,557.64 points at 11:17am.

Head of Research at Intermarket Securities, Raza Jafri, said the index was under pressure because of PTI Chairman Imran Khan’s announcement of beginning a long march to Islamabad on Oct 28.

He added, however, that the march would not have a lasting impact as long as it did not disrupt the efforts to stabilise the economy and boost foreign exchange reserves.

“In general, the ultra-cheap valuations already greatly price in such top-down risks,” he noted.

“There’s only one reason for the market’s slide and that is the [upcoming] long march. It was under pressure since Monday because Imran had said he would announce the date this week. Otherwise, economic indicators have remained unchanged,” First National Equities Limited Director Amir Shehzad said.

AKY Securities Chief Executive Officer Amin Yousuf also attributed the negative sentiment to Imran’s announcement, saying people were concerned about political instability.

In addition, this is a rollover week due to which people are swapping their positions, which is contributing to the downward trend, he said.

According to Yousuf, other factors weighing on the index include low inflows, the pressure on the rupee and rising oil prices in the international market that had led to concerns of an increase in inflation and subsequently, a change in the monetary policy.

The stock exchange generally comes under selling pressure in the last week of every month. It is the roll-over week when the future contracts are to be settled or rolled over to the next month.