Pakistan’s stocks down by 1,302 points as Russia launches attack on Ukraine

KARACHI: Pakistan’s equity market on Thursday witnessed a bloodbath as KSE 100 index fell by about three percent following Russia’s decision to attack Ukraine during Prime Minister Imran Khan’s visit to Moscow, traders and analysts said.

Pakistan’s equities closed at 43,831 after shedding 1,302 points in a single day, recording a downfall of 2.9 percent.

“Stocks fell across the board after Russian assault on Ukraine which was followed by global equity sell-off,” Ahsan Mehanti, chief executive officer of Arif Habib Corporation, told Arab News. “Foreign selling, and investor concerns over economic impact of record surge in global oil prices played a catalyst role in the bearish close.”

The traded volume and value for the day increased by 87 percent and 28 percent to 349 million shares and Rs8.74 billion, respectively, according to the data released by the Pakistan Stock Exchange (PSX).

The attack on Ukraine by Russian forces plunged the global stocks and pushed the oil over $100 per barrel while the international gold prices surged by around $77 to $1,972 per ounce.

The Pakistani rupee also slid against the US dollar and fell by 0.13 percent to reach Rs176.39 in the inter-bank market.

“The attack has jolted global equity markets,” Adil Jilani, head of economic division at Trust Securities and Brokerage, commented. “The American and European markets took much of the brunt. Pakistan’s equity market witnessed a massive sell-off by around 1,300 points which is the highest in a single day so far in the current fiscal year.”

“As the Brent is trending higher and has already touched $105 per barrel, investors are worried about inflation and their appetite for risk has further deteriorated,” he added.

Financial experts said the rising oil prices could further increase inflationary pressure in Pakistan’s economy.

“Pakistan’s monthly inflation stands at 13 percent while weekly inflation has crossed 18 percent,” Jilani said. “This is likely to increase further due to rise in the petroleum and energy prices along with enduring governance challenges.”

Some experts maintained, however, the impact of Russia’s attack on Ukraine would have short term implications and things would soon go back to normal.

“Investors are looking for safe haven following the Russian attack, so its impact will be short lived and things will normalize soon,” Samiullah Tariq, director research at the Pakistan-Kuwait Investment Company, told Arab News.

Russia is the third largest oil producer and caters to one-third of Europe’s gas requirements. Germany has already frozen the Russian Nord Stream 2 gas project after the invasion. Sanctions on Russia would further affect the funding stream of Russian banks and hit energy supply disruptions across the globe. This would elevate global oil shocks and inflation to new highs, according to analysts.

Russian President Vladimir Putin announced Russian military action at a time when he was hosting Pakistan’s prime minister and the two leaders were scheduled to discuss their bilateral political and economic relations.

Pakistan’s diplomatic experts downplayed the impact of Khan’s visit to Russia on the South Asian nation’s relations with the United States and other Western countries.

“The prime minister’s visit was preplanned and had nothing to do with the attack,” Abdul Basit, Pakistan’s former spokesman and ambassador, told Arab News.

“The repercussions of the sanctions on Russia would be on those companies who are dealing with Pakistan,” he said, adding: “There will be no impact on our relationship with the USA or the West.”

Basit said despite the iciness of the Biden administration, Pakistan and the US were still doing a great deal of business with each other and their bilateral relations would not be affected by the prime minister’s Moscow visit.