KARACHI: Pakistan shares declined by more than 6.7 percent on Monday, the highest in 18 years, following a global equity selloff as the global coronavirus crisis is spreading panic.
Trading in equities was halted on Monday for 45 minutes after share prices nosedived by 4.6 percent in the opening session. The temporary halt was fourth in the past six trading sessions — a measure used by the stock exchange to calm the market to protect investors.
During the afternoon trading session, the benchmark Karachi Stock Exchange (KSE 100) index declined by 2,435 points, or 6.76 percent, the highest since May 2002, when it slipped 7.45.
“It is the biggest decline in percentage since 2002,” Samiullah Tariq, research director at Arif Habib Limited, told Arab News. “The market is down following global equity selloff, as equity markets across the world continue to show big declines over fears of economic impacts of coronavirus,” he said.
Pakistan’s equity market continues to bleed amid a raise in reported coronavirus cases.
“Investors fear the impact of international lockdown on country’s manufacturing and exports sectors,” Ahsan Mehanti, senior equity analyst, told Arab News. “The market is also in pressure due to outflows of foreign funds from capital market,” he added.
Pakistan has registered an outflow of $790.7 million as of March 12, which were invested by overseas investors in the country’s short-term government papers, State Bank of Pakistan (SBP) data shows.
However, according to SBP governor Dr. Reza Baqir, the central bank is ready to fight any market shocks.
“The central bank is monitoring the situation closely and remains ready to take any actions needed to address disorderly market conditions,” he told Bloomberg on Sunday.
Analysts say the central bank is expected to cut its key interest rate, following other central banks, including the US Federal Reserve, which has brought down the rate to 0 (zero) percent to support the economy. Pakistan’s interest rate has been kept unchanged at 13.25 percent since July 2019.
The SBP is expected to unveil its monetary policy for the next two months on Tuesday.
“Hope the SBP also cuts interest rates by a significant amount, around 150-200 basis points, to support Pakistan economy and markets,” Khurram Schehzad, senior financial analyst and CEO of financial advisory firm Alpha Beta Core, told Arab News.
According to analyst Ahsan Mehanti, the central bank is likely to cut the interest rate by 100 basis point (1 percent).
The KSE-100 index closed 2,397 points down on Monday, in the highest decline in terms of points.
