PSX Stocks Nosedive Amid Political Uncertainty and IMF Review Delay Business Wire

PSX Stocks Nosedive Amid Political Uncertainty and IMF Review Delay Business Wire

Shares on the Pakistan Stock Exchange (PSX) fell sharply on Tuesday, with analysts blaming the selloff on political uncertainty and a delayed completion of the ninth review of the International Monetary Fund (IMF).

The benchmark KSE-100 index plunged 1,378.54 points, or 3.47 percent, to close at 38,342.21 points. It was the highest one-day drop since June 24, 2022, according to Arif Habib Limited.

The index hit an intraday low of 38,287.81 points, down 1,432.94 points, or 3.74%, at 3:23 p.m.

First National Equities Limited director Amir Shehzad said the market was already under pressure due to political uncertainty following the dissolution of the Punjab Assembly. He noted that Khyber Pakhtunkhwa Chief Minister Mahmood Khan is also expected to send a brief to the governor to dissolve the provincial assembly today.

However, the market came under additional pressure on signs that the government’s negotiations with the IMF could be delayed, it added.

Ahsan Mehanti of Arif Habib Corporation said the index fell on reports of tough IMF conditions, including the end of exchange rate management, rising gas prices and the resolution of circular debt issuance. .

In addition, reports of a benchmark interest rate hike at the upcoming meeting of the central bank’s Monetary Policy Committee also weighed on sentiment, he said.

Dalal Securities CEO Siddique Dalal also attributed the drop to political uncertainty. “If the National Assembly is also dissolved and an interim government is installed, who will negotiate with the IMF? The IMF has reportedly reiterated its conditions again today to raise electricity and gas tariffs, raise the oil tax and impose additional taxes.

“The situation is bad. Nothing will change until the ninth review of the IMF is completed, ”she stressed.

On the other hand, there was a sell-off due to the mutual fund bailout, he added.

The KSE-100 Index had closed down 684 points last week on political uncertainty after Punjab Chief Minister Parvez Elahi formally advised the governor to dissolve the provincial assembly.

The Punjab Assembly was dissolved on Saturday and an interim prime minister has yet to be appointed. The KP Assembly is also expected to be dissolved soon as part of the opposition’s strategy to force the government to hold early general elections.

Meanwhile, the country’s foreign exchange situation has worsened with the reserves of the State Bank of Pakistan (SBP) falling to $4.34 billion, the lowest level since February 2014.

The country has faced severe dollar shortages, resulting in restricted imports of even food and industrial raw materials. The latest position of foreign exchange reserves reflects that the country does not have enough dollars to cover even one month of average imports. In the prevailing situation, Pakistan needs to complete the much-delayed 9th IMF review for the release of $1.18 billion.

Pakistan entered a $6 billion IMF program in 2019, which was increased to $7 billion last year. The ninth review of the program had previously been postponed for two months due to the unwillingness of the PML-N-led government to accept certain conditions placed on it by the Fund, and disagreements have yet to be resolved.

On January 6, Prime Minister Shehbaz Sharif had said that an IMF delegation would arrive in Pakistan in the next two to three days to finalize the ninth review.

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