The Karachi Stock Exchange (KSE) has gone down 4.1 percent or 1,419.4 points to settle at 33,100.34 points on the week’s first day of trading on Monday. The panic selling at the KSE-100 index started as the world stock markets plunged after the China shares dived nearly nine percent and oil prices tumbled in the international market. The US stocks were on track to end the day with steep losses despite a striking comeback in a volatile day. This is almost the first time the global sell-off which has gripped the local stock market and the same reaction is expected in days to come. According to experts, the KSE-100 Index is reacting in line with global share markets that have been experiencing bearish trends amidst concerns over the slowdown in the Chinese economy and political instability in Greece.
The world equity markets have lost more than $5 trillion in a three-day route, which is followed by the devaluation of currency by the Chinese government. In Karachi, small players are offloading their portfolios as foreign investors are selling their stocks to cover the losses they have incurred during the last few days. The foreign investors own nearly 30 percent of the $7 billion holdings of the Karachi Stock Exchange and domestic investors promptly reacted to the selling. On the international market front, the Standard and Poor’s 500 index has been downed by four percent and has apparently landed in correction territory. As the US investors have started focusing on domestic issues, the CBOE Volatility Index shot over the 50 mark before dropping back to 36.
The Karachi Stock Exchange is emerging as an important player in the world financial arena, sharply reacting to variables of demand and supply as well as profit and loss. According to experts, the Chinese stocks have shown the worst performance since the world experienced overall financial crisis in 2007 and the current situation has wiped out what was left of the gains in 2015. The Pakistani economy is resilient and has always emerged successful from the worst situations. The current losses in the stock market are a transit phase and the situation will go back to normal in the near future. The most pressing issue before the government at the moment is to arrest the falling prices of the Pakistani rupee as dollar has been gaining value day by day whereas it is losing strength in the face of world currency market. Fall of currency means fall of economy and the government must come to rescue the value of the Pakistani rupee.
