Bears dominated the Pakistan Stock Exchange on Monday, with shares plunging by 1,300 points in intraday trade due to heightened political tensions.
The benchmark KSE-100 index fell by 1370.56 points, or 1.71 per cent, closing at 78,747.33 points, down from the previous close of 80,117.89 points.
Yousuf M Farooq, director of research at Chase Securities, attributed the decline to “heightened political tensions and media reports on banning Pakistan’s largest and most popular political party,” as reported.
“Following a significant rally, a correction was expected, and the increased political noise has exacerbated this correction,” he added.
Mohammed Sohail, chief executive of Topline Securities, noted that substantial selling by local institutions on Friday, combined with ongoing political uncertainty, impacted market sentiment and pushed the index lower.
Raza Jafri, chief executive of EFG Hermes Pakistan, concurred, stating that “political noise, along with aggressive institutional selling in heavyweight index names, has driven the market down since Friday.” However, he also mentioned a cautious return of value buying.
The government’s announcement on July 15 about considering a ban on PTI and seeking Article 6 proceedings against key party figures exacerbated investor concerns. This move was viewed as an effort to prevent PTI from emerging as the largest party in the National Assembly.
“Investors are apprehensive about heightened political tensions resulting from the potential ban on the main opposition party amidst geopolitical pressures,” remarked Awais Ashraf, director of research at AKD Securities.
Shahab Farooq, director of research at Next Capital Limited, highlighted political uncertainty and concerns over a possible rate cut in the upcoming July monetary policy committee meeting as contributing factors to the bearish sentiment.
He also noted that “a robust earnings season could restore investor confidence moving forward,” provided the political environment stabilizes.
