The Pakistan Stock Exchange (PSX) witnessed a significant upheaval in its benchmark KSE-100 index, plunging by 1,700 points during early morning trading on Friday. The abrupt downturn was attributed to mounting political uncertainty surrounding the delayed results of the general election.
In the initial stages of trading, the index experienced a staggering drop of 2,278 points, as reported by the PSX website. However, a partial recovery ensued, with the index ultimately shedding 1,720.27 points, marking a 2.68% decline and settling at 62,423.60 points by 9:30 am, compared to the previous day’s close at 64,143.87.
Mohammed Sohail, CEO of Topline Securities Ltd, highlighted the discrepancy between market expectations and initial unofficial results. Pre-election surveys had indicated anticipations of a Pakistan Muslim League-Nawaz (PML-N) led coalition government, but the emerging outcomes seemed to challenge this prospect.
CEO of First National Equity, Ali Malik, pointed out that investors initially anticipated a politically stable government post-elections. However, the prevalence of independent candidates and uncertainty about the composition of the next government led to confusion among investors. The hesitation to buy and the inclination to sell were attributed to concerns over potential political instability with an administration formed by independent candidates.
Faran Rizvi, Head of Equity at JS Global, emphasized the role of “political uncertainty” as a primary factor contributing to the market’s downturn. Caution among market participants regarding long positions was noted, and Rizvi stressed the pivotal importance of political stability for achieving long-term macroeconomic improvement and positive growth in the market index.
The ongoing volatility reflected the intricate interplay between political developments and market dynamics, influencing investor sentiments amid a period of heightened uncertainty.