Stock market plunges to its lowest level in two-and-a-half years
The Pakistan Stock Exchange lost another 1,000 points by midday Monday — the biggest fall in any Asian market that day and fell to its lowest level since May 2016 as investors continued to pull out amid economic uncertainty.
Market capitalisation has come down to $50 billion compared to $80 billion only six months ago, say analysts.
The benchmark KSE-100 Index, a gauge to measure market performance, fell more than 3% by noon on Monday and was hovering at the 36,320-point level, the lowest in the last two-and-a-half years. The market has been experiencing a bearish trend as investors are skeptical about the country’s economic situation and global trends affecting the market.
The KSE-100 index lost 4% of its value last week after investors feared that some of the stocks may be excluded from the MSCI emerging market index. This means Pakistani stocks, like HBL and Lucky Cement, which are part of this global capital markets index, may not attract investors anymore.
However, some analysts say it is not just the MSCI, but the overall economic uncertainty and some other global trends that are affecting investor sentiments.
Pakistan is facing a shortage of dollars to continue paying for its imports and service its foreign debt obligations and therefore is at risk of a default. The country has already asked for a bailout package from the IMF, but it will come at a price — a free-float exchange rate, higher interest rates and higher electricity, gas and petrol prices as well as a cut in government expenditures.
Photo: Arif Habib Research
For a layman, this means a slowdown in economic growth, which will result in fewer jobs, and layoffs, and businesses may hold back on investment. The dollar will become more expensive and utility bills and petrol prices will go up, resulting in more inflation.
Foreigners have been pulling out because of the uncertain economic outlook and delayed decisions on part of the new government, analysts say, referring to the PTI’s decision to seek an IMF loan so late. If the dollar goes up, it will wipe out any gains the have accumulated over the stocks they buy, which is why are they are pulling out now and may return when the rupee depreciates.
Right now, the US economy is also recovering, so foreign investors are finding it more attractive to invest there and are pulling out of emerging markets like Pakistan.
Foreigners sold shares worth $32.6 million — the largest selling volume in eight weeks — in the last week. Some analysts say the stock market will reach the 3,500-point level while others fear the index may fall below that level.
The KSE-100 Index is the worst performer so far this year, losing 22% of its value in dollar terms, but most capital markets around the world show a declining trend.
https://www.samaa.tv/news/2018/10/stock-market-plunges-to-its-lowest-level-in-two-and-a-half-years/
Tabdeeli?
The Pakistan Stock Exchange lost another 1,000 points by midday Monday — the biggest fall in any Asian market that day and fell to its lowest level since May 2016 as investors continued to pull out amid economic uncertainty.
Market capitalisation has come down to $50 billion compared to $80 billion only six months ago, say analysts.
The benchmark KSE-100 Index, a gauge to measure market performance, fell more than 3% by noon on Monday and was hovering at the 36,320-point level, the lowest in the last two-and-a-half years. The market has been experiencing a bearish trend as investors are skeptical about the country’s economic situation and global trends affecting the market.
The KSE-100 index lost 4% of its value last week after investors feared that some of the stocks may be excluded from the MSCI emerging market index. This means Pakistani stocks, like HBL and Lucky Cement, which are part of this global capital markets index, may not attract investors anymore.
However, some analysts say it is not just the MSCI, but the overall economic uncertainty and some other global trends that are affecting investor sentiments.
Pakistan is facing a shortage of dollars to continue paying for its imports and service its foreign debt obligations and therefore is at risk of a default. The country has already asked for a bailout package from the IMF, but it will come at a price — a free-float exchange rate, higher interest rates and higher electricity, gas and petrol prices as well as a cut in government expenditures.
Photo: Arif Habib Research
For a layman, this means a slowdown in economic growth, which will result in fewer jobs, and layoffs, and businesses may hold back on investment. The dollar will become more expensive and utility bills and petrol prices will go up, resulting in more inflation.
Foreigners have been pulling out because of the uncertain economic outlook and delayed decisions on part of the new government, analysts say, referring to the PTI’s decision to seek an IMF loan so late. If the dollar goes up, it will wipe out any gains the have accumulated over the stocks they buy, which is why are they are pulling out now and may return when the rupee depreciates.
Right now, the US economy is also recovering, so foreign investors are finding it more attractive to invest there and are pulling out of emerging markets like Pakistan.
Foreigners sold shares worth $32.6 million — the largest selling volume in eight weeks — in the last week. Some analysts say the stock market will reach the 3,500-point level while others fear the index may fall below that level.
The KSE-100 Index is the worst performer so far this year, losing 22% of its value in dollar terms, but most capital markets around the world show a declining trend.
https://www.samaa.tv/news/2018/10/stock-market-plunges-to-its-lowest-level-in-two-and-a-half-years/
Tabdeeli?
