Islamabad, Mar 11 (PTI) Cash-strapped Pakistan's stocks plummeted for the fourth consecutive day on Thursday as the KSE-100 index fell by another 911.92 point or 2.09 per cent, in the wake of recent political instability in the country involving the fate of Finance Minister Abdul Hafeez Shaikh who lost in the last week's Senate election.
Shaikh, considered as the force behind the recent improvement in the economic situation in the country, was defeated by Pakistan Democratic Movement candidate and former premier Yousaf Raza Gilani in Senate election on March 3, leaving a question mark on his future.
He was appointed as finance minister three months ago but is not a member of the parliament and should become a member within six months from appointment or lose the job.
Dawn newspaper reported that after the market opened at 43,691.68 points, the index hit an intraday high of 43,891.00 but entered the red territory as the day wore on. It recorded an intraday low of 42,688.20 – down 1,003 points.
The bear rampage has heavily dented the stock market since the start of the week with the KSE-100 index dragged down by 3,057 points, which market watchers said had wiped off all the gains since January 1.
On Wednesday, the PSX had lost 531.23 points, or 1.20pc, breaking the 44,000 psychological support and settling at 43,691.68 points.
The gathering clouds on the political horizon spooked investors who decided to unwind positions ahead of the heated events of election of chairman and deputy chairman of the Senate, scheduled for Friday, followed by the opposition’s threat of a Long March.
The PDM, an alliance of 11 Opposition parties, had announced to take out a Long March from Karachi on March 26 with a rally and reach Islamabad on March 30 to force Prime Minister Imran Khan Khan to step down and call early elections.
KASB Securities Chairman Ali Farid Khwaja said there were multiple r easons for the decline. He said concerns about political uncertainty were likely to remain until there was clarity on the Senate chairperson election, which is said to be a close contest between the government and the Opposition.
Ruling Pakistan Tehreek-e-Insaf party's nominee Sadiq Sanjrani is expected to face a tough challenge from joint opposition candidate Yousaf Raza Gilani in the race for the chairmanship of the Senate on Friday.
A tough competition is expected between the two sides in the House of 100. The winner will need to get a simple majority of 51. The PDM - an alliance of 11 Opposition parties - claims that it has support of 51 senators. Similar claims have been made by the government.
The news about new taxes and removal of tax incentives given to the construction sector and other industries 'is creating a bit of a panic', Khwaja said.
'The scare of inflation has returned, especially with oil prices reaching USD 70. The market is starting to price in expectation of an interest rate hike.
'This will lead to a sector rotation out from cyclical stocks such as cement and steel into banks and oil and gas,' he added, saying the trend could also broadly lead to capital flight from equities into bonds.
Meanwhile, the political situation in the country is uncertain after the debacle suffered by the government in the senate elections. Prime Minister Imran Khan got a vote of confidence with the hope to bring stability. But it has been followed by new tension between the government and the Opposition over the Senate chairman election.
The election is due to be held on Friday evening and the defeat of the government's candidate Sanjrani will further extend the existing fluid political situation and its likely impact on the stocks. PTI SH RS RS