Trading was earlier halted at the PSX for an hour after the
benchmark index plummeted by 6,000 points triggering the suspension, only to
drop another 2,000 points when trading resumed.
The automatic circuit breakers are designed to prevent panic
selling and provide investors time to reassess during extreme market
volatility.
The benchmark KSE-100 index initially declined by 6,287.22
points, or 5.29% by 11:58am (PST), before trading was halted. Shortly after
reopening, it declined by a cumulative 8,687.69, or 7.31%, from the last close
to 110,103.97 at 1:15pm.
At 2:02pm, the index was at 113,154.63, down by 5,637.03
points or 4.75%, from the last close.
The previous time
that the PSX had seen such a massive slump was on December 19, 2024
when the KSE-100 index shed 4,795.31 points amid rising political noise and
missile program-related US sanctions on Pakistani companies.
Awais Ashraf, director research at AKD Securities,
attributed the decline to “investors’ fears that tariff hikes could lead to
global recession through weaker demand”.
“We believe being an import-led economy … the imposition of
US tariffs would benefit us due to possible decline in global commodity
prices,” he added.
Mohammed Sohail, chief executive of Topline Securities, also
attributed the decline to the global market crash.
He noted that the stock market had halted after falling 5pc
to cool down around 12pm.
He said that the oil and gas exploration sector, technology,
and textile sector were expected to be affected as they were either linked to
global commodity prices or global aggregate demand.
Arif Habib Limited, in a note, said this was a historic
day-on-day decline, leading to a market halt.
Yousuf M. Farooq, director research at Chase Securities, said
markets were broadly down on fears of a global recession. About the initial
decline, he had noted that the index had witnessed a relatively modest drop compared
to other regional markets.
He noted that there was notable selling pressure in oil and
banking stocks.
“Lower oil prices are expected to negatively impact earnings
for oil exploration companies,” he stated, highlighting that at the same time,
textile exporters could “face headwinds from new US tariffs”.
“While these tariffs pose short-term risks, particularly for
the textile sector, the overall impact of the US trade policy may prove neutral
to positive for Pakistan — especially if commodity prices stay low,” he added.
On the government’s role, he stressed that the federal government would have to “move quickly and start negotiations for the removal of tariffs from Pakistani products”.
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