For the fourth time in six working days, the trading was halted at the Pakistan Stock Exchange after the KSE-30 index fell down by 5%.
On Monday, the KSE-100 index dropped down by nearly 4.58% to 34,409 points amid coronavirus fears. The panic-induced selling caused the index to nosedive over 1,651 points in early trading, which led to a halt to trading activity for nearly 45 minutes as per the new PSX rules.
External shocks due to breakout of coronavirus infections are pushing Pakistani stocks into a bear market.
Upon imposition of market halt, all equity and equity-based derivative markets got suspended.
The ‘market halt’ had been introduced by the Securities and Exchange Commission of Pakistan (SECP) in PSX regulations in December 2019. It comes into action when the KSE-30 index moves 4% either way and remains there for five consecutive minutes.
A.A.H Soomro, managing director at Khadim Ali Shah Bukhari Securities Pvt said,
“The fear is spreading faster than the virus. Investors are entering a period of uncertainty. Couple that with the SCRA outflows, investors are wary of the economic impact and the true picture of that is far from being quantified.”
While the developed economies have the economic ammunition to fight it off, Pakistan has less fiscal ability to allocate resources to support industries. “The oil savings are diluted until we have a declining trend in COVID-19 or any success story of vaccines”, he added.
Stock markets around the world were roiled on Monday after the Federal Reserve slashed interest rates in an emergency move and its major peers offered cheap U.S. dollars to ease a ruinous logjam in global lending markets.