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Pakistan Stocks, Currency Tumble after Bhutto Killing - ASHARQ AL-AWSAT English Archive
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KARACHI, (Reuters) – Pakistani shares slumped on Monday and the currency hit a six-year low, the first market reaction to the killing of former premier Benazir Bhutto whose death has plunged the country into a violent political crisis.

The Karachi stock market fell 4.7 percent, its steepest dive in 18 months, after last week’s assassination unleashed a wave of violent unrest. The threat of instability in nuclear-armed Pakistan also helped to push up global oil and gold prices.

“There are no buyers in the market, only sellers,” said Shuja Rizvi, director of broking at Capital One Equities.

“Every stock on my screen is limit-down.”

The benchmark Karachi Stock Exchange 100-share index pulled up short of its 5 percent limit on daily moves — a cap designed to stop panic selling — but brokers said thin volumes suggested foreign investors were still reserving judgment.

Bhutto was killed in a gun and bomb attack on Thursday ahead of elections scheduled for Jan. 8, throwing into doubt a smooth transition to civilian-led democracy after almost a decade of military-backed government under President Pervez Musharraf.

The killing unleashed street violence, especially in southern Sindh province, Bhutto’s political stronghold and home to the country’s biggest city and financial capital, Karachi.

Mobs angry at her death torched vehicles and railway stations, prompting police to adopt a shoot-on-sight policy. The violence and security crackdown paralysed the country, shutting the stock market on Friday and freezing production nation-wide.

“There’s been no activity…It’s all over Pakistan,” said Malik Anwar, secretary-general of the Federation of Pakistan Chambers of Commerce and Industry. He added that his own manufacturing and trading conglomerate was at a standstill.

Majyd Aziz, another industrialist and ex-chief of the Karachi Chamber of Commerce and Industry, said cargoes were stranded at ports and factory gates around the country for lack of transport. Many truck drivers were still too afraid to venture out.

On Monday, as cities returned to life, the selling began, threatening to reverse an inflow of investment that had taken the stock market to record highs on the eve of Bhutto’s killing. The KSE index still gained 40.2 percent this year, making it the fourth best performing stock market in Asia.

But daily turnover was the lowest for almost nine months.

Among the top blue chips, Oil and Gas Development Co Ltd, National Bank of Pakistan and Pakistan Petroleum Ltd all fell the limit of 5 percent.

The Pakistan rupee, managed closely by the central bank, fell almost 1 percent against the dollar to stand at 61.95 rupees, its weakest level since late October 2001.

A senior currency trader said the central bank was seen intervening to support the rupee at around 61.80.

Dealers and fund managers said investors were awaiting a decision on the timing of the next election, currently scheduled for Jan. 8 but widely expected to be delayed. The Election Commission said on Monday it would make its decision on Tuesday.

On Sunday, Bhutto’s Pakistan People’s Party chose her 19-year-old son Bilawal as her political heir and co-chairman of the party, along with her widower, Asif Ali Zardari. The party also declared it would go ahead and contest the election.

“The People’s Party decision to contest in the upcoming elections is a good sign,” said Sajid Bhanji, a dealer at Arif Habib Securities Ltd.

But Zubair Hussain, sales head at KASB Securities Ltd, said investors still needed more certainty: “Until clarity emerges, it’s safe to say investors will stay away from the market.”

Asharq Al-Awsat

Asharq Al-Awsat

Asharq Al-Awsat is the world’s premier pan-Arab daily newspaper, printed simultaneously each day on four continents in 14 cities. Launched in London in 1978, Asharq Al-Awsat has established itself as the decisive publication on pan-Arab and international affairs, offering its readers in-depth analysis and exclusive editorials, as well as the most comprehensive coverage of the entire Arab world.

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