Increased tensions along the border between Pakistan-Afghanistan this weekend sent shock waves through the financial markets and triggered panic at Pakistan Stock Exchange (PSX) on Monday.
Investor feelings got a sharp hit, with benchmark KSE-100 index noseding over 4,500 points in a single trade session in the midst of rising fears of regional instability. Shares suffered a downturn by losing 4654 points and settling on 158,443.
The market route followed reports of deadly clashes overnight along the border between Pakistan-Afghanistan, where at least 23 Pakistani soldiers were martyrated and over 200 militants killed in an attack allegedly launched from Afghan Territory, according to Inter-Services Public Relations (ISPR).
Read: Pakistan warns of direct strikes on Afghan Earth after cross -border attacks
The escalation comes at a time when PSX was already showing signs of strain, with investors who were not nervous about uncertainty about Pakistan’s IMF program and the wider economic views. The KSE-100 index had dropped 3.5% last week to close at 163,098.19 points, weighed down by thinning volumes and profits after opening in a chaotic start.
JS Global Head of Equity Research Waqas Ghani told Express Pakinomist That the market has lost about 9,500 points in the last six sessions, driven by weak investor mood in the midst of escalating cross -border tension between Pakistan and Afghanistan. “Index tumbled down to the intra-day low at 5031 points, 3.1% over geopolitical uncertainty that triggered widely based sales across key sectors including bank, energy and cement as investors remain cautious.”
Ktrade Securities Equity Trader Ahmed Sheraz observed that PSX continues to roll from a number of negative developments, with Benchmark KSE-100 index losing about 4,654 points (-2.85%) to close at 158,443 points.
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Market mood that is already fragile due to diminishing expectations of a political rate set up in the upcoming Monetary Policy Committee (MPC) meeting and increased control of the International Monetary Fund (IMF) during its ongoing program review has been further undermined by deteriorating security relationships.
Furthermore, the recent wave of terrorist attacks that claimed the life of more security staff has significantly shaken the confidence of investors. Pakistan has reciprocated in action against described Tehreek-in-Taliban Pakistan’s (TTP) units across the border in Afghanistan.
Tensions have also been high since police collide with Tehreek-E-Labaik Pakistan (TLP) broke out last week, first in Punjab, then across the country. This development has introduced additional layers of uncertainty at Bourse.
Given the unstable security environment and the critical IMF review, Sheraz expects the market mood to remain very sensitive in the short term. Any development on both front is likely to significantly affect investor behavior and market direction, he said.
