Pakistan’s stock market takes the worst blow amid tension with India

KARACHI: Pakistan’s equity market continues to bear the brunt of Indian aggression along the eastern borders of the country, making August the worst performing month of 2019, equity analysts told Arab News on Monday.
“Major reasons behind this subdued performance was heightened tension at the eastern border, news flow regarding a meeting of Financial Action Task Force’s (FATF) regional subgroup Asia Pacific Group (APG) in Canberra and the potential divestment of state-owned companies by the government,” Samiullah Tariq, Director of Research at Arif Habib Limited told Arab News.
Pakistani bourse’s benchmark KSE 100 index posted a decline of 2,266 points in August 2019, “translating into a negative return of 7.1 percent and 5.5 percent in dollar terms.”
“This is the worst performing month of calendar year CY19 taking CYTD (calendar year to date) return to -19.9% ($ based negative 29.1%),” Tariq said.
On August 5, New Delhi took the unprecedented step of revoking a special status accorded to Jammu and Kashmir in the Indian constitution, placing the entire region under curfew as a measure to limit and prevent protests in the area.
India also increased its military presence in J&K and along the Line of Control (LoC) where heavy gunfire exchange with Pakistan’s security forces has been reported. Despite an uproar from the international community, Indian authorities have yet to lift curfew imposed nearly a month ago.
Apart from the heightened Indo-Pak tension, the local bourse also felt some pressure as Pakistan was placed on enhanced monitoring after the conclusion of APG’s meeting in Canberra.
Average volumes during August surged by 47.4 percent to 112.8 million shares. The average value soared by 49.7 percent to $26.2 million.
Some encouraging economic indicators, including current account deficit which declined by 73 percent in July 2019 to $579million from $2.13 billion of July 2018, posted strong recovery in the third week. However, the bullish spell proved to be short-lived.