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Amid political division and conjecture that the long-awaited bailout tranche may not materialize, the Staff Level Agreement (SLA) between the International Monetary Fund (IMF) and stock markets declined on Monday.
The benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) began the day but quickly became negative. It continued to fall throughout the day, losing 404.12 points, or 0.97 percent, to finish at 41,195.06 points.
The market fell on Tuesday due to predictions of increased taxes in the approaching budget and Imran Khan’s claim that there is an 80% probability he would be jailed, according to Mohammad Arbsh, manager of equities at Siddiqsons Limited.
Salman Naqvi of Aba Ali Habib Securities, however, said that despite favorable rates, no one is buying and that volumes have decreased as a result of political division and significant court summonses this week that have created market uncertainty.
He said that there is cause for concern given the dollar’s current value of Rs. 308 versus the rupee and the rising inflation figures from the previous week.
He also brought up rumors that the IMF’s staff-level agreement may not stand since the IMF has set unrealistic demands.
However, according to Naqvi, things may settle down if the political climate becomes better, the SLA is signed, and the next monetary policy is sensible.
Raza Jafri, head of equities at Intermarket Securities, had similar feelings, saying that investors are uneasy due to the unpredictable political and economic environments.
Furthermore, he said, the worry of not receiving an IMF loan has brought the dread of default back into sharp relief.
According to reports, this is putting more pressure on the rupee in the open market. Jafri also said that the bad attitude is being reflected in stocks, as shown by today’s 1 percent decline.
