KARACHI: Pakistan stock market closed the weekend trading on bearish note by shedding 1,147 points amid persistent lack of clarity on the formation of future government and dismal performance of country’s manufacturing sector, equity analysts said.
Three-time former prime minister Nawaz Sharif’s Pakistan Muslim League-Nawaz (PML-N) party and former foreign minister Bilawal Bhutto-Zardari-led Pakistan People’s Party (PPP) have held two rounds of consultation, but have not been able to chalk out a clear plan for government formation.
Both parties set up coordination committees after the Feb. 8 election in which the PML-N emerged as the largest party in the National Assembly with 75 seats, while the PPP secured the second spot with 54 seats. Both are rivals of ex-PM Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) party.
The key stock index, KSE100, dropped by 1,147 points or 1.8 percent to close at 59,872.96 on Friday, compared to the previous close of 61,020 points. The index has lost 3,927 points since the surprise outcome of the February 8 general elections.
Pakistani stock analysts said the uncertainty prevailing over the formation of the future government coupled with the dismal performance of manufacturing sector and gas price hike supported the bearish spell at the bourse.
“Stocks fell sharply amid dismal data related to negative LSM [large scale manufacturing] growth at minus 0.39 percent for July-December 2023 and lack of clarity over coalitions power sharing formula,” Ahsan Mehanti, CEO of Arif Habib Corporation, told Arab News. “The cabinet approval of increase in gas prices also played a catalyst role in the bearish close.”
Zafar Moti, CEO of Zafar Moti Securities, said the market was still fundamentally strong but the election outcome was the key bearish factor.
“There’s still nothing wrong with the stock market as it is giving best payouts, best dividends and best results,” he added.
Moti believes the bear would continue to sway the market until the next government was formed and a clear economic roadmap was shared by the new administration.
Pakistani financial experts said the continued protest by PTI and other parties after the elections was also creating negative environment at the bourse.
“The market is looking at the key players in the next government, trying to figure out what the new government would look like amid PTI protests,” Shahid Ali Habib, CEO of Arif Habib Securities, told Arab News.
“These are things that will create further political uncertainty,” he continued. “But once the formation of the government happens, it is expected that the market will rebound.”
Pakistan on Friday also released the trade numbers, indicating that the trade deficit had declined by 24 percent on an annual basis to $2 billion in January 2024.
During the first month of the year, exports stood at $2.8 billion, up 25 percent on an annual basis, but declining by negative one percent on month-on-month (MoM). The country’s imports in January stood at $4.8 billion that was down by 1 percent on an annual basis, according to the Pakistan Bureau of Statistics.
During the seven months of the current fiscal year (7MFY24), the trade deficit also decreased by 33 percent on an annual basis to $13.2 billion.
