KARACHI:
The Pakistan Stock Exchange took a hammering on Wednesday and plunged over 1,000 points in intra-day trading as hike of 25 basis points in the benchmark interest rate by the State Bank of Pakistan to 7.25% dented investor sentiments.
In addition, the market expects further monetary tightening in Pakistan as signaled by the central bank in its monetary policy announcement on Monday.
Moreover, the slide in global markets on the back of possible default by China’s property giant Evergrande also contributed to the dip.
At 1:07 PM, the KSE-100 index was trading at 44,909.1 points after a fall of 1,099.75 points of 2.39%.
Speaking to The Express Tribune, Pak-Kuwait Investment Company Head of Research Samiullah Tariq said that the prime reason behind the steep decline in KSE-100 index is the increase in benchmark interest rate.
“The State Bank of Pakistan has taken a step towards monetary tightening and investor sentiments took a hit because they expect it to deepen further,” he said.
Echoing his views, AA Gold Commodities Director Adnan Agar said that hike in benchmark interest rate shattered the spirits of market participants which could be gauged from the battering being experienced by the KSE-100 index.
Expectations of further hike in interest rate going forward took a toll on market sentiment, he said.
“Besides, global stock markets are on a downtrend for past two to three due to risk of default by Chinese Evergrande group and uncertainty over US monetary policy decision due later during the day,” he said. “Both these factors fuelled sell off at the local bourse.”
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