KARACHI: Pakistan’s equity market witnessed a bloodbath on Tuesday amid fears of another policy rate hike, looming default risk due to delayed International Monetary Fund (IMF) talks, and depressed industrial output data, said traders and analysts.
The benchmark KSE-100 index opened in the green zone and gained 222 points during intraday trade. However, investors resorted to selling which caused it to shed 1,379 points, bringing it down by 3.47 percent, which was its highest fall since June 24, 2022.
The bearish momentum was mainly triggered by fears of massive hikes in interest rate by 150 or 200 basis points in the upcoming monetary policy meeting on Monday, according to a Topline Securities survey.
“Stocks fell across the board on uncertainty over SBP [State Bank of Pakistan] policy announcement next week and investor concerns over the ongoing forex crisis,” Ahsan Mehanti, chief executive officer of Arif Habib Corporation, confirmed while speaking to Arab News.
“Rupee instability, dismal data regarding the decline of growth in LSM [Large Scale Manufacturing] by 5.5 percent on year-on-year basis and uncertainty over the outcome of the Pakistan-IMF talks on program conditions amid political uncertainty played a catalyst role in the bearish close,” he continued.
The country is only left with $4.3 billion in official reserves which cover less than a month of imports. The situation is also exerting huge pressure on the national currency.
On Tuesday, the Pakistani rupee depreciated by 0.14 percent to close at Rs228.66 against the US dollar in interbank market amid the severe shortage of the dollar for external payments, including the import of essential commodities and raw material.
The country’s industrial output has also suffered due to the liquidity crunch and slowing economic growth on the back of stalled import growth of raw materials.
The growth of Pakistan’s large scale manufacturing industries decreased by 5.49 percent in November, 2022, when compared to November, 2021, and increased by 3.55 percent when compared to October 2022.
According to the Pakistan Bureau of Statistics. the sector showed an overall decline of 3.58 percent during July-November 2022-23 when compared to the corresponding period the year before.
“Pakistan remains in a severe dollar liquidity crunch and, in the short run, IMF is the only option to sail through without seeing microeconomic instability,” Dr. Khaqan Najeeb, former finance ministry advisor told Arab News.
He added that any inflow from friendly countries would only “complement money from multilateral institutions and help build Pakistan forex reserve.”
Najeeb said Pakistan was likely to get the brunt of global economic slowdown in term of exports from emerging markets as well as the remittance flows.
The country has witnessed a decline in remittances, an important source to replenish foreign exchange reserves, in recent months. However, experts believe the situation can improve if the country avails the IMF program on time and save an impending default.
Bloodbath at Pakistan equity market amid fears of policy rate hike, dismal economic outlook
https://arab.news/muhcy
Bloodbath at Pakistan equity market amid fears of policy rate hike, dismal economic outlook
- Benchmark KSE-100 index plunged by 1,379 points, its highest fall since last June, as investors resorted to selling
- Experts see IMF as Pakistan’s only option to resolve dollar liquidity crunch without microeconomic instability
China’s mediation eases fighting between Pakistan, Afghanistan — sources
- China’s envoy shuttles between Pakistan and Afghanistan to mediate in conflict
- Gulf countries that mediated in the past embroiled in Middle East conflict
ISLAMABAD/BEIJING: Chinese mediation efforts, including a message from President Xi Jinping, have helped ease the worst fighting between Pakistan and Afghanistan since the Taliban returned to power in 2021, three Pakistani government officials said.
The officials said a meeting between the Chinese ambassador to Pakistan, Jiang Zaidong, and Prime Minister Shehbaz Sharif late last month included a message from Xi to cease hostilities.
Neither side has reported any Pakistani air strikes on Afghanistan in recent days and ground fighting along the 2,600-km (1,600-mile) border has tapered off, although daily clashes continue to be reported.
China has said it is in contact with both countries about ending hostilities but Mosharraf Zaidi, a spokesman for Sharif who has previously said there would not be any talks with the Taliban, did not respond to questions about Beijing’s efforts.
Pakistani security officials have said the military campaign will continue until desired goals were achieved, which was to prevent militant attacks in Pakistan launched from Afghan soil.
Pakistan’s foreign ministry and military did not respond to Reuters requests for comment.
Islamabad launched air strikes on Afghanistan on February 26, saying the Taliban were providing a safe haven to militants carrying out attacks in Pakistan. Kabul denies the charge and says militancy in Pakistan is an internal problem.
The Chinese efforts came as Qatar, Saudi Arabia and Turkiye, who hosted talks between Pakistan and Afghanistan during previous clashes in October, have been embroiled in the war in the Middle East following the US and Israeli strikes on Iran.
“China’s Special Envoy for Afghanistan Affairs is currently shuttling between the two countries to mediate, while Chinese embassies in both nations maintain close communication with the respective parties,” the Chinese foreign ministry told Reuters in an email.
“The most urgent task is to prevent the fighting from expanding and for the two countries to return to the negotiating table as soon as possible.”
The foreign ministry added that Foreign Minister Wang Yi held telephone talks with Pakistan’s Deputy Prime Minister and Foreign Minister Ishaq Dar on Tuesday to discuss the conflict.
China’s ambassador to Kabul, Zhao Xing, and the special envoy Yue Xiaoyong met Afghanistan’s acting Foreign Minister Amir Khan Muttaqi this week, the Afghan foreign ministry said in a statement.
Afghanistan and Pakistan have said they inflicted heavy damage on the other in the conflict and killed hundreds of opposition troops, without providing evidence. Reuters has not been able to verify the reports.
Beijing, a longtime Pakistani ally, has invested heavily in mines and minerals in both nations.
The investments include over $65 billion in road, rail and other development projects in Pakistan, part of Beijing’s Belt and Road Initiative to expand land and sea trade routes to Europe and Africa.
