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The Karachi Stock Exchange.—File photo by Reuters

KARACHI: Pakistan’s main stock market plummeted over 400 points on Monday, the same day as the Pakistani president and his Iranian counterpart inaugurated construction work on a much delayed pipeline between the two countries, despite repeated warnings of sanctions by the United States.

The Karachi Stock Exchange (KSE) benchmark 100-index ended 441.62 points, or 2.46 per cent, lower to close at 17,522.56 points.

“There was a panic-like situation in the market as investors fear United States may impose economic sanctions on Pakistan because of the gas pipeline,” said analyst Mohammad Sohail of Topline Securities.

“The market experienced turmoil all the day. It never recovered till it suspended trading.”

Brokers said selling was witnessed across all stocks.

“Across the board selling was witnessed as investors preferred to reduce their exposure before any negative news,” said equity dealer Samar Iqbal.

Oil and Gas Development Company was down 4.01 per cent to 196.70 rupees. Foods and Fertilizer Engro Corporation fell 4.59 per cent to 122.11 rupees, while Fauji Fertilizer was down 4.3 per cent to 106.99 rupees.

“The market’s future trends depend on what the US State Department says in its next statement about the gas pipeline,” said Sohail.

Pakistani analysts said a statement from the US State Department was expected later in the evening, which could determine the future course of the market.

US State Department spokesperson Victoria Nuland has warned if the deal is finalised, it “would raise serious concerns under our Iran Sanctions Act.”

Pakistani President Asif Ali Zardari’s spokesman said the world should realise the project was being commissioned “purely to meet economic needs of the country”.

In the currency market, the rupee ended weaker at 97.85/97.90 against the dollar, compared to Friday’s close of 97.70/97.75.

Overnight rates in the money market rose to 9.40 per cent form Friday’s close of 9 per cent.

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