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Pakistan Stocks Fall Most in Ten Weeks on U.S. Aid & Risk Concern

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Pakistan Stocks Fall Most in Ten Weeks on U.S. Aid & Risk Concern

Pakistan’s stocks fell the most in two and a half months on speculation the U.S. may reduce aid after Osama bin Laden was killed near the nation’s capital and as investors fled riskier assets amid inflation concerns in emerging markets.

The benchmark Karachi Stock Exchange 100 Index fell 2.4 percent, the most since Feb. 25, to 11,672.05 at the 3:30 p.m. close. Four companies on the 100-member index rose, 87 declined and prices of nine remained unchanged.

Oil & Gas Development Co., the biggest fuel explorer, slid 3.7 percent as crude prices extended declines to a third day. National Bank of Pakistan (NBP) slumped the most in six weeks after the U.S. senator who sponsored a bill tripling non-military aid to Pakistan called for hearings to assess their relationship.

“Pakistan’s situation after Osama’s killing is quite worrisome for investors,” said Shahrukh Naqvi, head of sales at Invest Capital & Securities Ltd. in Karachi. “People in such times prefer to sit with cash instead of being invested.”

Pakistan’s stocks also dropped on concern faster inflation in developing countries will spur more increases in interest rates. The nation’s consumer prices rose 13.04 percent in April from a year earlier after a 13.16 percent gain in March, Arif Cheema, director general of the Federal Bureau of Statistics said May 3.

India’s equities dropped for an eighth day today after the central bank unexpectedly boosted rates yesterday by half a percentage point. China’s Shanghai Composite Index slid the most in two months after the government said taming inflation was “critical.” The MSCI Emerging Markets Index slid 0.8 percent.

Overseas Investors

The Karachi stocks gauge has fallen 2.6 percent this year, driving down estimated earnings to 6.9 times, the lowest among benchmark measures in Asia. Global funds bought $235.5 million worth of Pakistani shares in the nine months ended March 31, compared with net sales of $183 million a year ago, according to Karachi-based State Bank of Pakistan.

The death of bin Laden has prompted immediate calls from U.S. lawmakers to re-evaluate the relationship with Pakistan, where the al-Qaeda leader was found and killed less than 35 miles from the capital, Islamabad.

Democratic Senator John Kerry of Massachusetts, an architect of a 2009 bill committing $1.5 billion annually to Pakistan for five years, called for a new round of hearings to “assess the strategic relationship” between the two countries and to examine how to arrive at an “acceptable end-state” in Afghanistan.

U.S. assistance for Pakistan is “critically important” and it remains too early to “jump to conclusions” about Pakistan’s overall aid program following the killing of bin Laden in the country, Moody’s Investors Service Vice President Aninda Mitra said in Hanoi today.

Pakistan intends to address any allegations or shortfalls on its part, said Husain Haqqani, the country’s ambassador to Washington. The most common questions that have been raised are whether Pakistan was complicit in protecting bin Laden, was over-confident in its own abilities, or overlooked evidence of his presence, he said.

Pakistan Stocks Fall Most in Ten Weeks on U.S. Aid, Risk Concern - Bloomberg
 

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