Shares at the Pakistan Stock Exchange (PSX) fell on Friday on political uncertainty created by Punjab Chief Minister Chaudhry Parvez Elahi’s advice to the governor to dissolve the assembly even as the country secured a $4 billion economic lifeline from the United Arab Emirates and Saudi Arabia.
The benchmark KSE-100 index lost 480.44 points, or 1.18 per cent, to close at 40,323.45 points.
Head of Equity at Intermarket Securities Raza Jafri said the index opened under pressure “due to the resurgence in political noise and uncertainty in Punjab politics”. He added that this was overshadowing positives on the external account, with the UAE also joining Saudi Arabia in extending support to Pakistan.
Dalal Securities CEO Siddique Dalal also noted that the expected inflows from UAE and Saudi Arabia should have created bullish momentum but then the advice to dissolve the Punjab Assembly resulted in the bears dominating.
The dissolution of the Punjab Assembly would be followed by the Khyber Pakhtunkhwa Assembly and uncertainty would prevail, he said. The federal government may also be forced to dissolve the National Assembly and a caretaker government would not have the authority to negotiate with the International Monetary Fund (IMF) for the completion of the much-needed ninth review, he added.
“There is no consistency as any rally is not extended and the market cannot sustain positive momentum,” Dalal said, adding that some profit-taking was also expected as it was the last trading day of the week.
A day earlier, the UAE agreed to roll over loans of $2bn that were due to be repaid in February and March, as well as, giving another $1bn.
Separately, the Saudi Fund for Development (SFD) signed an agreement in Islamabad to fund $1bn worth of oil imports on deferred payment.
The central bank’s reserves dropped to a critical level of $4.34bn on Thursday, the lowest since February 2014 and barely enough to finance less than one month of controlled imports.
But the rollover now provides the authorities with an opportunity to revive the IMF programme over the next few days, gradually build back foreign exchange reserves, and put to end a tight control on imports that has crippled the manufacturing sector and created a shortage of essential items.
However, Punjab CM Elahi’s formal advice to the governor to dissolve the provincial legislature has given rise to fears of continued political uncertainty as the country’s economic woes mount.
Elahi’s move capped weeks of speculation, legal wrangling and a public spectacle of the differences between the ruling allies in Punjab — the PTI and PML-Q — over whether the assembly would be disbanded or not.
Geo News quoted Punjab Governor Balighur Rehman as saying that dissolving the assembly, which was the representative body of millions of people, would not be an easy decision to take, one he would undertake “with a heavy heart”.
Meanwhile, PTI leader Fawad Chaudhry said the KP Assembly would also be dissolved immediately and the nation would head for elections in both provinces.
“The PDM government should think prudently, decide an electoral framework and move towards nationwide elections to help the country attain political stability leading to economic stability,” he suggested.