Bears took hold of the trading floor on Monday at the Pakistan Stock Exchange (PSX) as shares proceeded to decline 1,500 points.

The benchmark KSE-100 index declined 1178.46, or 1.03 per cent, to stand at 113,077.26 points at 12:50am from the last close of 114,255.72 points.

Finally, the index closed at 112,745.01, down by 1510.71 or 1.32pc, from the last close.

While talking to Dawn.com, Awais Ashraf, director research at AKD Securities, said, “Investors are concerned over the potential imposition of trade tariffs by Trump and the suspension of foreign aid.”

“We anticipate that these tariffs will push US inflation higher while dampening economic growth, which could lead to a decline in commodity prices and higher for longer interest rates,” he said.

On Pakistan’s import-driven economy, Ashraf highlighted that country was positioned “to gain from [the] declining commodity prices, while the suspension of foreign aid is expected to have a minimal impact on financial inflows”.

Additionally, he said that he did not anticipate any special tariffs on the country’s exports “due to their limited scale and focus on essential goods”.

For fiscal year (FY) 2025, he underscored that the total grants were budgeted at $176 million — which accounted for just 1pc of the external funding target of $19.34 billion.

“Interestingly, the country has already received US$38.3m in grants from the US during the first five months of FY25,” he noted, adding that exceeded the full-year budgeted amount of $21m.

“Furthermore, no bilateral loan allocations from the US are planned for FY25,” he said.

After robust performances in the last five months, the PSX turned bearish in the first month of 2025 due to uncertain global and internal political scenarios after the execution of Donald Trump’s America First Policy, which includes boosting the US manufacturing sector by imposing import tariffs on its major trade partners.

The Trump administration has imposed tariffs on Canada, Mexico and China, effective Feb 1, which may trigger a trade war, disturbing the global trade balance and causing a fallout.

However, the Pakistani shares remained depressed in the last two weeks of January, pushing the stock exchange into the red zone.

Amid the situation, nervous investors continued offloading their holdings in the backdrop of the uncertain economic and political situation, which was well reflected in missing tax collection projections, falling foreign exchange reserves, weaker rupee and contraction of large-scale manufacturing despite massive rate cuts in the last seven months, bringing the State Bank of Pakistan’s policy rate to 12pc from an unprecedented level of 22pc in June 2024 in six intervals.

Export-reliant stocks, currencies slump on Trump’s ‘America first’ move

Emerging Asian currencies and shares tumbled on Monday after US President Donald Trump slapped tariffs on imports from the country’s three biggest trade partners, stoking fears of a trade war and its impact on export-focused economies in the region.

Markets were downbeat in Asia, with stocks reliant on exports getting hit the most, ranging from Japanese automakers to chipmakers in Taiwan, South Korea, to Chinese e-commerce firms.

As Trump had promised last month, the United States hit Canada and Mexico with duties of 25pc and China with a 10pc levy, with retaliatory moves immediately promised by Canada and Mexico, the top two US trading partners.

China said it would challenge Trump’s levies at the World Trade Organisation.

The reality of a trade war sent the Mexican peso to its lowest in nearly three years, the Canadian dollar to a 22-year low and offshore yuan to a record low.

All currencies in Asia slumped, with the Thai baht and Indonesian rupiah among the top losers.

“In the weeks ahead, tariffs are likely to represent an overhang on markets and contribute to volatility, at least until investors gain greater clarity on the path and destination of US trade policy,” UBS analysts said.

Markets in Taipei fell 3.5pc while Seoul was 2.5pc lower, weighed down by exporters. Chip exporters Samsung Electronics and Taiwan Semiconductor Manufacturing Co (TSMC) plunged 2.7pc and 5.7pc, respectively.

TSMC was seen playing catch-up with the global sell-off in artificial intelligence-related stocks last week when Taiwan was closed for the Lunar New Year.

Bangkok stocks traded around an over-five-year low. Shares in Jakarta lost 2.2pc in its weakest trading session in six months.

Heavyweight coal miner Adaro Andalan and Adaro Minerals fell 4.5pc and 8pc each, dragging the local benchmark. Indonesia, Southeast Asia’s largest economy, reported annual inflation below the central bank’s target range, a sign that a surprise policy easing last month boosted spending and bolstered the case for another rate cut.

The rupiah was trading 0.9pc lower against the greenback. The Indian rupee further weakened to a fresh low, as investors bet on rate cuts by the local central bank. The Philippine peso and the Malaysian ringgit dropped 0.4pc and 0.8pc, respectively.

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