Another meltdown at PSX as benchmark sheds 641 points on govt’s indecision – Business

Advertisement
Advertisement

Pakistan Stock Exchange (PSX) experienced deep trading pressure on Wednesday as the KSE-100 index benchmark lost 1,200 points in intraday trading before regaining some of its losses to close 641.21 points, or 1.47pc, down .

According to the PSX website, the KSE-100 Index opened at 43,504.36 points and reached a peak of 43,649.59 points before falling sharply to 42,394.32 points – a drop of 1,255.27 points or about 2.88 percent.

The course is finally closed at 42,863.15 points, representing a drop of 641.21 points, or 1.47pc.

Raza Jafri, head of Equities at Intermarket Securities, said urgent decisions were needed for a unity government. “The government is dragging its feet so far, undermining investors’ confidence and leading them to sell out their fears.

The market, he stressed, needs the International Monetary Fund (IMF) program to resume as soon as possible to find a place. “If the process continues to be delayed, consumers will continue to run,” he added.

Meanwhile, First National Equities CEO Ali Malik criticized political uncertainty over the market downturn.

“The rate of return on fixed income has reached 14pc. If it increases, the market will soon return from here.

Today’s decline comes two days after the PSX saw a meltdown in which the KSE-100 lost 1,447.67 points.

Share prices have plummeted as investors have expressed concern over the country’s ability to pay off debts within foreign exchange reserves.

An editorial in Parhlo on Wednesday noted that a major factor contributing to the erosion of investor sentiment was the failure of the new coalition government to come up with a credible strategy to take tough political decisions to reform the economy. For example, it remains indecisive with regard to the conversion of unstable energy subsidies, a ‘preliminary step’ that the IMF requires it to take before it can agree to restart funding.

In a recent meeting with the new finance minister, the IMF linked the continuation of its borrowing program with the transformation of petroleum subsidies, introduced by the previous government. However, Prime Minister Shehbaz Sharif has now twice rejected a summary of the Oil and Gas Regulatory Authority to raise fuel prices.

PTI announced a four-month suspension of petrol and electricity tariffs (until June 30) on 28 February as part of a series of measures to bring relief to the community.

The PML-N coalition government has strongly criticized the Imran Khan government for “suspending” the IMF program with petroleum subsidies but even though he has been in office for a month, he has not withdrawn funding. The finance minister has always said that these grants are impossible and cost R120 billion a month.

Ismail said petrol should have cost Rs245 per liter according to an agreement reached between the previous government and the IMF. However, the PML-N government was still selling it for R145 a liter and will do its utmost to maintain that value, he added – a sign that the new government is finding it difficult to make a decision that may be unpopular with its voters. .

Furthermore, the editor pointed out that there were differences in the PML-N over how to deal with the Fund, with former finance minister Ishaq Dar, who opposed the IMF ‘dictation’, seeking a new ‘simplified’ loan. “If the finance minister’s reins are drawn in London, then Finance Minister Miftah Ismail will have his hands tied.”

Meanwhile, the dollar has reached a high level against the rupee earlier today, breaking the Rs190 mark on the interbank.

The green line was valued at Rs1.44, exceeding Tuesday’s close of R188.66. The last time the dollar reached its peak was on April 1, when it crossed the Rs189 mark.

The rupee is under pressure due to high oil import bills and estimates awaiting Saudi package, Ahsan Mehanti, director of Arif Habib Group told Mettis Global.

The general secretary of the Exchange Companies Association of Pakistan, Zafar Paracha, said delays in negotiations with the International Monetary Fund were putting pressure on foreign reserves.

Leave a Comment