The Pakistan Stock Exchange (PSX) witnessed a bloodbath as it opened on Monday, with analysts citing conditions resulting from the ongoing conflict between the U.S., Iran and Israel as encouraging panic selling.
At closing time, the PSX’s benchmark KSE-100 Index stood at 151,972.99 points, down 16,089.17 points (9.57%) from the previous close of 168,062.16, its highest ever one-day fall.
The decline started at the outset of the session, with the PSX plunging over 15,000 points within minutes, prompting a halt to trading for 45 minutes under the risk-management rule. Once trading resumed, the index reached an intraday high of 159,328.59 before settling at 151,972.99 points.
Analysts have blamed the panic selling on ongoing geopolitical tensions, including the U.S.-Israel joint operation against Iran and Pakistan’s ongoing operation in Afghanistan. They have warned that the situation may persist for up to a week, with potential for it to worsen further if oil prices continue to spike. Pakistan’s reliance on imported energy makes it particularly vulnerable to fuel prices, especially with regards to inflation of essential commodities.
Crude has already jumped to over $80/barrel, with fears it will continue to rise amidst an effective blockade of the Strait of Hormuz, responsible for nearly 25% of global oil transport, and bombings of Gulf refineries by Iran.
Topline Securities has warned that the Pakistani rupee could face pressure if higher imports coincide with growing uncertainty in the Middle East. They have also warned of a potential impact on remittances in case of a prolonged conflict.