Shares on the Pakistan Stock Exchange (PSX) fell for the second straight day on Tuesday amid ongoing political and economic turmoil.
The benchmark KSE-100 lost 1,324.45 points, or 3.23 percent, to 39,646.37 at 2:44 p.m.
Siddique Dalal, managing director of Dalal Securities, said the index fell due to a number of reasons, including fears of dissolution of Punjab and Khyber Pakhtunkhwa assemblies and rising political confrontations, which hurt investor confidence.
Other factors affecting the market were year-end mutual fund redemptions, deteriorating economic conditions, pressure on the rupee, dollar shortage and the delay in the completion of the International Monetary Fund’s (IMF) ninth review, he added.
“All these factors are depressing the market and there is no hope of improvement in the future,” Dalal said.
“Many problems have accumulated, including the lack of dollars, but the main reason remains the political uncertainty and the impending liquidation. [two provincial] assemblies. There is also pressure on foreign reserves,” commented Amir Shehzad, director of First National Equities Limited.
Former PSX director Zafar Moti also agreed that the “obvious” reason for the stock market decline was political uncertainty. He also cited default news as a reason for the decline.
Moti lamented that unlike past crisis times when the PSX management had gathered senior members of the capital market to sort out issues and clarify rumours, nothing happened recently.
PTI chairman Imran Khan on Saturday announced that his party’s governments in Punjab and Khyber Pakhtunkhwa will dissolve their assemblies on December 23 to pave way for fresh elections.
The constitution did not allow the election to be postponed beyond 90 days after the dissolution of the assembly, he said in a video message, flanked by Punjab Chief Minister Parvez Elahi and KP Chief Minister Mahmood Khan.
However, in an attempt to derail the dissolution, a delegation of PPP and PML-N lawmakers moved a no-confidence motion in the Punjab Assembly on Monday evening against KM. to Elahi.
Separately, a motion of no confidence was also submitted against PA Chairman Sibtain Khan under Article 53 of the Constitution.
Meanwhile, the economic situation of the country is getting worse day by day. The currency reserves of the State Bank of Pakistan are in a critical state, having decreased by 11 billion dollars within a year. In December 2021, the central bank’s reserves were $17.686 billion, which is now $6.7 billion as of December 9, barely enough to cover one month’s worth of imports.
The seriousness of the situation has escalated as the ninth review of the International Monetary Fund’s $7 billion program is being delayed, even as remote talks between fund officials and the government are underway to release $1.18 billion.
The talks, which were originally scheduled to take place in the last week of October, were postponed to November 3, and then the gaps in estimates between the two sides continued due to delays.
Pakistan has to repay at least 13 billion dollars in the rest of the fiscal year. However, it is not clear when it will receive more inflows from bilateral and multilateral institutions, raising fears of a default.
The country was already in the grip of an economic crisis, facing decades of high inflation and dangerously low foreign exchange reserves, when it was ravaged by floods that killed at least 1,700 people and caused serious damage, estimated at $30 billion by authorities. agricultural lands and infrastructures.