Stocks tumbled as much as 670 points during Monday’s session as the benchmark KSE-100 index fell to a low of 40152.70 points in the afternoon hours of the session.
Oil and gas exploration, cement and commercial banks led the losses during the session.
The index opened on a positive note gaining 218 points in the first two hours of trade. Higher-than-expected remittances inflows, as reported by the State Bank of Pakistan, helped lift investment sentiment in the early trading hours.
“Uncertainty surrounding the upcoming Financial Action Task Force (FATF) review coupled with the new International Monetary Fund (IMF) conditions regarding the gas and electricity tariff hikes are the key drivers behind the market’s bearish trend,” senior analyst at Arif Habib Ltd, Faizan Kamran, told Dawn.
News of retired Lt Gen Asim Bajwa’s resignation as the special assistant to the prime minister and public meetings planned by opposition parties in the coming week also has investors on the edge of their seats, he added.
Ali Asghar Poonawala, deputy head of research at AKD Securities, also attributed uncertainty among investors to "noise building on the horizon in terms of the APG (Asia-Pacific Group) meeting and associated FATF sessions".
"By and large, status quo is expected in terms of the FATF plenary outcome, where news reports of developments are often quoted – unsubstantiated and largely based on unnamed sources – in international news media before the final statement is released by the organisation. This leads to significant distortions, where equity investors tend to shun uncertainty and stay on the sideline," Poonawala said.
However, he added that "voting procedures for the multilateral agency are [...] relatively supple where our understanding is that Pakistan has secured enough votes to avoid a negative outcome".
The market closed with the benchmark index 583 points in the red, or down 1.4pc, at 40,215.
Pakistan is hoping to get off FATF's grey-list with the financial watchdog's plenary meeting scheduled from October 21 to 23, where it is expected to discuss Pakistan's progress in terms of combatting money-laundering and terror financing.
In its recent report, the Asia-Pacific Group (APG) on Money Laundering has retained Pakistan — which was placed on the watchdog's grey-list again in February — on its “Enhanced Follow-Up” list for making meagre progress on technical recommendations of FATF to fight money laundering and terror financing.
Although the APG report has been released only a couple of weeks before FATF’s virtual review meeting, it would have no immediate bearing on the upcoming assessment of whether Pakistan should be retained or moved out of the grey list. The APG’s performance review is based on the country’s performance as of February this year on technical recommendations. The country in recent months is understood to have made robust progress on the 27 action points, including necessary legislation in 15 areas.