John
01-03-2011, 02:34 PM
Pakistani stocks ended 1.4 percent lower on Monday after the second largest party in the ruling coalition moved into opposition, depriving the government of a majority and raising the prospect of an early election.
The Karachi Stock Exchange's benchmark 100-share index fell 1.44 percent, or 173 points, to end at 11,849.46, on turnover of 91.18 million shares.
"There is nervousness in the market and foreign investors are closely watching what direction the economy and politics will take now," said Khalid Iqbal Siddiqui, director at Invest & Finance Securities Ltd.
Pakistani Prime Minister Yusuf Raza Gilani held talks with opposition leaders on Monday in a bid to head off a possible vote of no confidence after his government lost its parliamentary majority following a decision by the Muttahida Quami Movement (MQM) to quit the coalition.
The MQM announced it would go into opposition because of what it said government fuel price policies that are "unbearable" for Pakistanis.
The pullout, which may lead to a call for an early election, adds to uncertainty over the government's struggle to meet economic policy demands placed on it by the International Monetary Fund in return for an $11 billion loan.
"Government is running out of allies and more importantly running out of time to bring about corrective measures to stabilise the economy," said Sayem Ali, economist at Standard Chartered Bank.
"IMF staff review is due for June 2010 and the government will need to demonstrate ability to keep deficit at 4.7 percent of GDP and this looks like an impossible task."
Foreign investors bought shares worth a net $515 million in 2010 and were a major contributor for the 28 percent rise of the KSE-index last year are likely to stay on the sidelines awaiting clarity on the political situation.
In the currency market, the rupee ended at 85.65/70 to the dollar, weaker than Friday's close of 85.61/68 and dealers said the local unit is expected to stay under pressure following a rise in international oil prices.
In the money market, overnight rates ended at between 13.25 percent and 13.50 percent, compared with the Friday's close of 13.90 percent, amid increased liquidity in the interbank market.
Source - Yahoo.
The Karachi Stock Exchange's benchmark 100-share index fell 1.44 percent, or 173 points, to end at 11,849.46, on turnover of 91.18 million shares.
"There is nervousness in the market and foreign investors are closely watching what direction the economy and politics will take now," said Khalid Iqbal Siddiqui, director at Invest & Finance Securities Ltd.
Pakistani Prime Minister Yusuf Raza Gilani held talks with opposition leaders on Monday in a bid to head off a possible vote of no confidence after his government lost its parliamentary majority following a decision by the Muttahida Quami Movement (MQM) to quit the coalition.
The MQM announced it would go into opposition because of what it said government fuel price policies that are "unbearable" for Pakistanis.
The pullout, which may lead to a call for an early election, adds to uncertainty over the government's struggle to meet economic policy demands placed on it by the International Monetary Fund in return for an $11 billion loan.
"Government is running out of allies and more importantly running out of time to bring about corrective measures to stabilise the economy," said Sayem Ali, economist at Standard Chartered Bank.
"IMF staff review is due for June 2010 and the government will need to demonstrate ability to keep deficit at 4.7 percent of GDP and this looks like an impossible task."
Foreign investors bought shares worth a net $515 million in 2010 and were a major contributor for the 28 percent rise of the KSE-index last year are likely to stay on the sidelines awaiting clarity on the political situation.
In the currency market, the rupee ended at 85.65/70 to the dollar, weaker than Friday's close of 85.61/68 and dealers said the local unit is expected to stay under pressure following a rise in international oil prices.
In the money market, overnight rates ended at between 13.25 percent and 13.50 percent, compared with the Friday's close of 13.90 percent, amid increased liquidity in the interbank market.
Source - Yahoo.