Shares at the Pakistan Stock Exchange (PSX) took a major hit on Monday, with the benchmark KSE-100 index plunging 730.69 points, or 0.9%, by midday. The index dropped from a previous close of 81,292.13 points to 80,561.44 points, marking a sharp decline that weighed heavily on investor sentiment.
MAJOR STOCKS UNDER PRESSURE: HUBCO AND MARI PETROLEUM
Selling pressure in two major stocks, Hub Power (HUBCO) and Mari Petroleum, are a key factor in driving the index down. Hub Power’s decline stemmed from concerns about the potential revision of its power plant contracts, while Mari Petroleum faced pressure following its distribution of bonus shares to investors.
IMF EXTENDED FUND FACILITY APPROVAL OFFERS HOPE
Although the approval of the IMF Extended Fund Facility could stabilize the economy. Anticipation of easing inflationary pressures may create opportunities for monetary easing. This could lead investors to shift their focus to stocks with higher dividend yields and those likely to benefit from reduced interest rates.
MIDDLE EAST TENSIONS FUEL BEARISH MOMENTUM
Analysts also attribute the bearish sentiment to escalating tensions in the Middle East, which left investors nervous. Following the assassination of Hassan Nasrallah, Hezbollah’s top leader, by Israel over the weekend, geopolitical uncertainty has significantly increased. Further strikes by Israel on Monday, which targeted key Hamas figures and Palestinian leaders in Lebanon, continued to fuel concerns.
ASIAN AND GULF MARKETS FOLLOW SUIT AMID GEOPOLITICAL STRAIN
The volatility wasn’t limited to the PSX, as Asian markets were also affected. The Nikkei index plunged 4.6%, partly due to the uncertainty surrounding Japan’s new prime minister, Shigeru Ishiba, who has been critical of the Bank of Japan’s previous monetary policies.
Meanwhile, major stock markets in the Gulf region also witnessed a decline. Saudi Arabia’s benchmark index eased 0.1%, while Dubai and Abu Dhabi’s indexes fell by 0.3% and 0.4%, respectively, amid ongoing regional tensions.
OUTLOOK REMAINS CAUTIOUS AMID GEOPOLITICAL AND ECONOMIC UNCERTAINTY
With geopolitical uncertainty and regional conflicts influencing global markets, investors are treading cautiously. While the IMF’s involvement may provide a lifeline for the Pakistani economy, it remains to be seen how the global economic landscape and escalating Middle East tensions will shape market dynamics in the coming days.
