Earlier, Imran announced that his party’s governments in Punjab & KP would dissolve their assemblies on Dec 23.
Shares slide 330 points on continued political, economic uncertainty. Shares at the Pakistan Stock Exchange (PSX) fell 330.66 points on Monday, with analysts citing political uncertainty following the PTI’s announcement of dissolving the Punjab and Khyber Pakhtunkhwa assemblies later this week.
The benchmark KSE-100 index closed at 40,970.82 points, down 0.8 per cent. It reached an intraday low of 486.53 points at 12:17pm.
Head of Equity at Intermarket Securities Raza Jafri said the KSE-100 was weak on the back of continued political uncertainty and low foreign exchange reserves. “There is perhaps too much noise in politics, with the threatened dissolution of two provincial assemblies, and little to report on the pending assistance from Saudi Arabia,” he commented.
He said investor sentiment was expected to remain weak and trading activity thin until there was clarity.
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Three other analysts who spoke to medi attributed the stock market’s decline to political uncertainty as well. First National Equities Limited Chief Executive Ali Malik said trading volumes were low because of both political and economic uncertainty.
“There are huge discounts but the trust factor is at its lowest and people are not investing. However, there is no panic in the market,” he said.
Aba Ali Habib Securities’ Salman Naqvi noted that a “huge political crisis” would be created if two provincial assemblies were dissolved. In addition, economic fundamentals were weak and the shortage of dollars persisted, he said.
“If the government succeeds in signing an agreement with another country for a bailout or conclusive talks are held with the IMF (International Monetary Fund), then the dollar [rate and supply] can be stabilised. Otherwise, the pressure will remain,” Naqvi added.
Meanwhile, Arif Habib Corporation’s Ahsan Mehanti said investor concerns over the outcome of the government’s talks with the IMF on the ninth review, global equity sell-off and a surge in Pakistan dollar bond yields had caused bearish activity at the KSE-100.
PTI Chairman Imran Khan announced on Saturday that his party’s governments in Punjab and Khyber Pakhtunkhwa would dissolve their assemblies on Dec 23 to pave the way for fresh elections.
The Constitution did not allow elections to be delayed beyond 90 days of an assembly’s dissolution, he had said in a video address with Punjab Chief Minister Parvez Elahi and KP Chief Minister Mahmood Khan by his side.
The decision to dissolve assemblies was met with great objection from PML-N and PPP leaders — the main forces of the ruling Pakistan Democratic Movement government. Later, the PML-N had announced that it was ready to contest elections in case the PTI continued with its decision to dissolve the two assemblies.
Meanwhile, the country’s economic situation is deteriorating by the day.
The ninth review of a $7bn IMF programme is currently pending with remote talks being held between Fund officials and the government for the release of $1.18bn.
The talks, originally due in the last week of October, were rescheduled to Nov 3 and then kept on facing delays following gaps in estimates by the two sides.
Separately, the State Bank of Pakistan’s foreign exchange reserves are in a critical condition, declining by $11bn during a year. In Dec 2021, the central bank’s reserves were $17.686bn which now stand at $6.7bn as of Dec 9.
