The KSE-30 Index fell as much as 9.8% early in the day before paring decline to 7.3% once trading resumed after an hour-long halt.
Pakistan has also seen pro-Iran protesters across the country with at least 30 killed in clashes with police, as they tried to storm the gates of the US Consulate in the nation’s main port city of Karachi on Sunday. “The overall tensions in the Middle East has tanked the market along with the pro-Iran protests around the country,” said Bilal Khan, head of international equity sales, at Karachi-based brokerage Arif Habib. “Investors expect some buying to come in later in the day” with weak hands having largely exited the market, he added.
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Meanwhile, tensions with Afghanistan have also escalated, with Pakistan declaring “open war” with the country as both sides carried out cross-border strikes reaching as far as the Afghan capital and leaving at least hundreds dead.
Renewed tensions led the KSE-30 Index briefly enter bear-market territory on Monday, with the gauge falling more than 20% from a high in January. That’s likely to hit sentiment after an expanding investment base and stable government led to a nearly 50% rally in local stocks last year.
It appears that heavy forced unwinding by brokers in leveraged retail accounts has intensified the selloff, said Ali Raza, head of international equity trading at BMA Capital Management.
For Yasin Kodvavi, head of equities at Optimus Capital Management in Karachi, the selloff is buying opportunity to accumulate fundamentally strong names.