Pakistan’s Equity Market Suffers as Political Uncertainty Continues
Muhammad Haris
Pakistan’s equity market has experienced a significant downturn, with a loss of 4,271 points and a dented share value of nearly Rs 640 billion since the conclusion of the election, attributed to political uncertainty and the unresolved circular debt plan.
Since February 9th, the market has exhibited poor performance, characterized by increasing selling pressure in each session, resulting in the index plummeting below the critical threshold of 60,000 points during trading.
The KSE100 index has depreciated by 4,271 points or seven percent since the elections on February 8th, primarily due to the lack of clarity regarding the formation of the new government.Pakistani Stocks Plunged as Political Turmoil Continues
Discussions among leaders of key political parties have revolved around the establishment of a new government and the nomination of candidates for key positions, dominating public discourse during the week.
Despite strong corporate earnings and dividend announcements, political developments have overshadowed market sentiment.
Notably, OGRA officially announced the first semi-annual gas price hike, resulting in substantial increases for protected residential consumers (up to 40-60% across various slabs) and the fertilizer sector (a 175% rise in feedstock gas prices).
Foreign investment during the week amounted to $5.2 million, compared to a net buy of $5.7 million the previous week. Significant investments were made in the Exploration & Production sector ($2.2 million) and other sectors ($1.2 million).
The index concluded the week with a 4.9% decline, closing at 59,873 points.
Looking ahead, market volatility is expected to persist in the short term, but may stabilize as political uncertainties subside, particularly with the announcement of the new cabinet.
However, medium-term market performance is contingent upon signals from government negotiations with the IMF for the second SBA review and the next EFF program. Given ongoing uncertainties, market participants are advised to exercise caution and focus on blue-chip stocks.
An analyst from Arif Habib anticipates increased investor confidence with greater clarity on the political front in the upcoming week. Additionally, specific stocks are expected to attract interest due to anticipated strong financial performance during the ongoing results season.
