On Thursday, the Pakistan Stock Exchange (PSX) fell more than 600 points in early trade due to delays in completion of the International Monetary Fund’s (IMF’s) ninth review and political uncertainty.
During the first 10 minutes of today’s trading, the KSE-100 index had lost 613.5 points, or 1.47 percent, to reach 41,124.12.
Raza Jafri, head of equity at Intermarket Securities, said the market uncertain about the release of the IMF tranche next year amid fears it would be delay.
It noted in February 2019 that Pakistan enter a $6 billion IMF programme, which raise to $7 billion later in the year. A remote meeting between IMF officials and the government is currently taking place to discuss the release of $1.18 billion in accordance with the programme’s ninth review.
Pakistan stock exchange & IMF officials
An engagement round with IMF officials took place on November 18, but no formal schedule for the ninth review finalized.
It was originally expect that the talks would take place by the end of October, but they reschedule for November 3 and then continued to suffer delays due to discrepancies in both sides’ estimates.
As Jafri said, “Valuations are certainly cheap but we may see residual pressure from redemptions today, as tail-end flows shift to fixed income.”
Redemptions by some companies
According to Dalal Securities CEO Siddique Dalal, redemptions by some companies resulted in the decrease in the index. Furthermore, people exhausted because of the erosion of confidence and the eroding confidence to buy, he said.
As for the reasons behind the slump, First National Equities Limited Director Amir Shehzad believes it’s primarily due to political uncertainty.
It was for a variety of reasons [that the fall occurred]. In the first, Imran Khan has stated that he plans to announce when the [Punjab and Khyber Pakhtunkhwa] assemblies will be dissolved on the 17th. Political uncertainty has thereby placed enormous pressure on the market due to the lack of clarity.
“Secondly, the issues with the IMF still need to be resolve,” he say, adding that market sentiment also affect by default talk.
By Friday, the PTI will conclude its rallying under the election karao, mulk bachao (hold elections, save the country) campaign, and Imran will announce his ‘final’ plan to dissolve his party’s provincial assemblies at a large public gathering in Lahore on Saturday.
