The Pakistan Stock Exchange (PSX) on Monday saw a sharp decline as the benchmark KSE -100 index decreased by more than 3,000 points during the early business hours.
The index was dropped 115,488.18, depicting a decline of 3,303.48 points or 2.78%. It had reduced the high level of 117,601.62 below 1,190.04 points (1.00%) from the previous bandh of 117,791.66.
Economists blamed the decline for “investors fear that tariff hike may cause global recession through weak demand”.
“We believe that being an imported economy, we will benefit from implementing US tariffs due to a possible fall in global goods prices,” he said.
He said, “Fingering. The markets are roughly down to fear of a global recession.
“However, the KSE -100 index has only declined by 2.5PC -a relatively slight decline compared to other regional markets,” he said.
Economists said that there was a remarkable sales pressure in oil and banking stocks.
“Oil discovery at low oil prices is expected to affect negatively earnings for companies,” he said, at the same time, textile exporters can “face headwinds from the new American tariff”.
Economists said, “While these tariffs pose a short-term risk, especially for the textile sector, the overall effect of American trade policy can prove to be neutral to positive for Pakistan-the prices of commodity are low,” economists said.
In the short term, he commented that the textile sector could face profitability challenges due to both direct and indirect (first and second round) effects.
“However, low global commodity prices can help reduce inflation pressure, which is a leading domestic interest rates,” he said. “This, in turn, can support a gradual recovery in evaluation.”
On the role of the government, he insisted that the federal government would have to “move quickly and start negotiations to remove tariffs from Pakistani products”.
