Floods drag down PSX despite IMF bailout

Published
12
This screenshot shows trading activity at the Pakistan Stock Exchange on Tuesday. — Photo via PSX website
This screenshot shows trading activity at the Pakistan Stock Exchange on Tuesday. — Photo via PSX website

The Pakistan Stock Exchange lost over 300 points on Tuesday despite the International Monetary Fund’s (IMF) approval of the release of a $1.1 billion loan tranche late last night.

The benchmark KSE-100 index opened the day on a high note, gaining 547.93 points around 9:30am. Since then, however, the index began sliding, eventually reversing all its gains from earlier in the day and slipping into the red.

It closed at 42,195.25 points, down 309.09 points or 0.73 per cent. The index saw an intraday low of 42,106.02 points around 3:30pm.

While commenting on the stock market’s early morning rise, Raza Jafri, head of research at Intermarket Securities, said the KSE-100 index continued its strong recovery from intraday lows yesterday and “cheered up” on the IMF programme’s resumption.

“Some profit-taking may come through as the IMF programme isn’t a surprise, but the overall sense is one of optimism particularly as valuations are very cheap,” he added.

Later, Arif Habib Corporation Director Ahsan Mehanti said even though the stock market gained more than 500 points in early trade, it “disregarded” the IMF-related development as the day progressed, due to which investors booked profits at the upper levels.

“The damage caused to crops by the floods means that we will have to import wheat and cotton worth billions of dollars which will widen the trade deficit and increase inflation.”

Mehanti said that the market was also dragged down by rumours of an impending interest rate hike.

First National Equities Limited Chief Executive Ali Malik said the stock market had already rallied earlier on expectations of the IMF’s approval. The market was now analysing the flood’s effect on local production and trade, he added.

“The damage caused by the floods cannot be calculated yet [but it] is widespread. Inflation in Pakistan will rise very high because crops have been wasted and livestock killed. We will have to become a net importer of these, so foreign exchange will be involved. Secondly, our exports will be reduced and local consumption will rise.”

The commodities sector, including steel and cement, will rally because local consumption will increase, Malik said.

A day earlier, the IMF’s Exe­cu­tive Board completed the combined 7th and 8th revi­ews of a loan facility for Pak­is­tan, allowing immediate disbursement of $1.1bn to the country, said an official IMF announcement.

The statement pointed out that the disbursement “brings total purchases (money made available) for budget support under this arrangement to about $3.9bn.”

The board also approved “rephasing and augmentation” of Pakistan’s access to the funds by SDR720 million ($934m) which will bring the total access under the EFF to about $6.5bn.

The executive board also approved Pakistani authorities’ request for waivers of nonobservance of performance criteria.

Follow Dawn Business on X, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Muddled hierarchy
Updated 15 Nov, 2026

Muddled hierarchy

The jurisdiction of the two courts and a mechanism for settling disputes between them should be spelt out in law, not left to judges to fight over.
Growing crisis
Updated 15 Nov, 2026

Growing crisis

Calling population growth a national emergency is easy. Ensuring that the response reaches the people who need it is the real challenge.
Organised rackets
15 Nov, 2026

Organised rackets

ON the International Day against Transnational Organised Crime, observed today, Pakistan finds itself in a tight...
Referendum talk
Updated 14 Nov, 2026

Referendum talk

Unless the PPP is deliberately using Sindh as a bargaining chip, it should issue a clarification with a clear, consistent position on new administrative units, not one tailored to protect its home turf.
Mineral wealth
Updated 14 Nov, 2026

Mineral wealth

Minerals should not be presented as a solution to Pakistan’s long-term economic difficulties. The aim should be to build an industrial base rather than export raw materials.
Late diagnosis
14 Nov, 2026

Late diagnosis

AS we mark World Diabetes Day today, Pakistan faces a troubling question: how many people are living with diabetes...