At 10:08 am, the KSE-100 index dropped by about 1038 points, according to the PSX website. The index closed at 62,797.21, down 1.21 percent from the previous close of 63,567.33, at 10:31 a.m., having lost 770.12 points cumulatively.
Topline Securities CEO Mohammed Sohail ascribed the abrupt decline to the news of rising tensions between Iran and Pakistan.
Iran launched attacks in Pakistan on Tuesday, according to Iranian state media, targeting what it claimed to be bases for the militant organization Jaish al-Adl in the Balochistani border town of Panjgur. This led to Islamabad’s harsh denunciation and the downgrading of diplomatic ties.
Pakistan claimed to have destroyed terrorist hideouts in the Iranian province of Siestan-o-Baluchistan in an early-morning statement.
“Border tensions with Iran seem to be affecting investor sentiment, offsetting positives on the external account such as a healthy current account surplus and UAE’s debt rollover,” stated Raza Jafri, head of equities at Intermarket Securities.
“The market should find some support if this Iran issue does not escalate further,” he continued, “especially with result season approaching.”
“The stock market responded unfavorably to Pakistan’s retaliatory attack on Iran and concerns of potential escalation,” stated Yousuf M. Farooq, director of research at Chase Securities.
He did, however, note that the market has somewhat recovered from its low of 1,038 points. Encouraging current account numbers, the UAE’s debt rollover, and an IMF tranche release all contributed to the recovery.
According to him, traders expect a diplomatic solution to the problem, and a one-percent drop in value does not necessarily mean that investors are panicking “at least in the first hour of trading.”
