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PSX plunges over 1,378 points to hit 2.5-year low as politics weighs

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  • Political tumult panics investors into shedding holdings.
  • All sights set on IMF amid depleting forex reserves.
  • Macroeconomic concerns dampen sentiment.

KARACHI: Pakistan stocks Tuesday plunged to a 30-month low as the country’s extremely riotous political situation freaked economy-wary investors into stampeding towards the exits, resulting in whopping losses, traders said. 

The KSE-100 Shares Index, the benchmark of the country’s capital market, lost 1,378.54 points or about 3.47%, to close at 38,342.21 points.

Analysts say the dissolution of the Punjab Assembly and the prevailing crisis in the country amid continuous demand from Pakistan Tehreek-e-Insaf (PTI) for snap polls panicked the market into this vicious selloff.

The delay in the revival of the International Monetary Fund’s (IMF) loan programme and the ongoing political uncertainty in the country caused the bloodbath in the stock market.

PSX plunges over 1,378 points to hit 2.5-year low as politics weighs

Prime Minister Shehbaz Sharif-led government has been under pressure to revive the IMF programme but the “harsh conditions” set by the Washington-based lender have made it almost impossible for the country’s financial managers to proceed.

Meanwhile, the depleting forex reserves with the State Bank of Pakistan below the $5 billion mark — enough for less than three weeks of import — is making the investors jittery.

Talking to Geo.tv, Tahir Abbas, Head of Research at Arif Habib Limited, said the investment momentum was extremely negative.

The analyst pinned Tuesday’s tailspin partly on the IMF loan impasse and partly on the political crisis.

“Players are unable to see any efforts made by the government to resume the programme due to which they are not taking fresh positions,” he said.

Abbas added that news reports suggesting that the Khyber Pakhtunkhwa assembly would be dissolved today further dented investors’ sentiment.

Khurram Schehzad, CEO at Alpha Beta Core, said the IMF programme stalemate —a consequence of Pakistan’s dragging its feet on fulfilling the loan conditions— was one of the main triggers of the selloff as right now rapidly-depleting foreign exchange reserves were seemingly Pakistan’s biggest economic problem.

“The political uncertainty has increased due to the dissolution of the Punjab Assembly. There is a question mark on the federal government whether it will remain in power or not. The preexisting negative sentiment has now worsened,” Schehzad said.

He said the deeper the political uncertainty in the country, the higher the volatility in the market.

“However, if the government succeeds in reviving the IMF programme and reversing political uncertainty, the trend can take a turn for the better,” the analyst said.

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Malir Industrial Park is introduced by SIFC.

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The establishment of “industrial parks” by the Pakistan Economic Zone Development and Management Company and the Special Investment Facilitation Council aims to attract investors and stimulate the economy.

First up is the Malir Industrial Park, which gives companies access to important trade and transportation channels. This park will be different from heavy industry parks in that it will concentrate on small industries and diverse industrial offices. Among Karachi’s industrial zones, it would be noteworthy for providing security and necessary infrastructure.

In order to lower unemployment, the initiative intends to generate more than 200,000 jobs in the first five years. To increase the advantages of the program, the Korangi Association of Trade and Industry will become a member of the Malir Industrial Park Advisory Council.

The park will have easy access to Karachi Port and Jinnah International Airport due to its strategic location at the convergence of key highways, such as the National Highway and Malir Motorway. This would guarantee effective access to both domestic and foreign markets.

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The Saudi crown prince and PM Sharif promise to increase trade and investment relations.

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He emphasised how closely Saudi Vision 2030 matches Pakistan’s main strategic goals, strengthening the basis for both countries’ development.

In terms of trade, investment, and economic development, both leaders reaffirmed their dedication to strengthening bilateral cooperation.

A recent visit by a high-level Saudi delegation headed by the Saudi Investment Minister, during which a number of Memorandums of Understanding (MoUs) were signed to strengthen the economic partnership, was mentioned by Prime Minister Sharif.

Along with talking about the economy, the two leaders acknowledged the serious damage caused by Israel’s continuous aggression in the area and voiced their profound worry about it.

Peace in Gaza is linked to global progress: PM

In his earlier speech to the 8th Future Investment Initiative (FII), Prime Minister Shehbaz emphasised the catastrophic situation in Gaza and stressed that the world would find it difficult to meet its developmental goals unless there was an immediate end to the violence.

Shehbaz, the Saudi prime minister

With the topic “Infinite Horizons: Investing Today, Shaping Tomorrow,” the FII brought together prominent individuals to discuss investments in important fields such as robots, artificial intelligence, education, energy, finance, healthcare, and sustainability.

Pakistan’s worries over the worsening situation in Gaza were highlighted by PM Sharif’s direct remarks, which also highlighted the necessity of international cooperation in fostering peace.

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Task Force for FBR Digitization Established: Automated Supply Chain System Design

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A 10-member Task Force has been formed by the government to digitize the Federal Board of Revenue (FBR) in partnership with the Special Investment Facilitation Council (SIFC).

Improving FBR’s systems and completely digitizing its operations are part of the Task Force’s mandate. Policy interventions, data automation, software installation, and collaboration with provincial revenue authorities are among the main goals.

Together with developing a track-and-trace system through integrated automation, the task force will also establish an Automated Supply Chain System for distributors and wholesalers.

Pakistan Revenue Automation Limited would become a stand-alone IT bureau for planning and data preparation.

In order to create a unified national tax strategy, the project seeks to maximize revenue collection, increase transparency, and simplify Pakistan’s tax system while encouraging cooperation between the federal and provincial tax authorities.

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