On September 30, 2024, the Pakistan Stock Exchange's KSE-100 Index experienced a dramatic decline, shedding over 700 points due to escalating geopolitical tensions in the Middle East. By 1:23 PM, the index had fallen by 730.69 points, or 0.9%, closing at 80,561.44 points. Analysts attributed this downturn to significant selling pressure in key stocks such as Hub Power and Mari Petroleum. Awais Ashraf from AKD Securities highlighted that the market's bearish momentum was closely linked to the recent assassination of Hezbollah leader Hassan Nasrallah by Israel on September 28, which has heightened investor anxiety [1e12b6c5].
This decline follows a previous drop in the KSE-100 Index on September 30, where it had already lost nearly 800 points, closing at 80,522.25. The earlier decline was also attributed to fears of escalating conflict in the Middle East, which has created uncertainty in global markets and impacted oil prices. The index fell by 782.32 points week-on-week, with foreign investors withdrawing $12.443 million from the market. Key sectors affected included automobile, cement, chemicals, banks, and oil [844115c9].
Despite a brief period of optimism earlier in the month, following a staff-level agreement between Pakistan and the IMF for a $7 billion Extended Fund Facility (EFF) program, the market's positive sentiment was quickly overshadowed by ongoing political tensions and the recent geopolitical developments. The Current Account Deficit (CAD) for FY24 was reported at $681 million, down 79% YoY, while textile and food exports showed slight increases. The average daily trading volume had increased by 5.6% WoW to 463.55 million shares, and the Pakistani Rupee (PKR) appreciated by 0.1% WoW to close at 278.13/US$ [e82c9fa8].
Finance Minister Muhammad Aurangzeb emphasized the necessity for fundamental economic reforms to ensure that the latest IMF agreement is the last. Last week, Pakistan received $1.03 billion in Special Drawing Rights (SDR) from the IMF, which is expected to bolster the country’s foreign exchange reserves. However, the escalating political tensions and fears of wider conflict in the Middle East could significantly dent investors' confidence moving forward. The US has indicated increased military readiness in the region, further adding to the uncertainty [1e12b6c5].