Political uncertainty, expected rate hike drag shares 603 points down.

Shares at the Pakistan Stock Exchange (PSX) opened the week in red, with the benchmark KSE-100 index falling below the 40,000 points mark. Analysts attributed the slump to political and economic uncertainty and an expected increase in the policy rate.

The KSE-100 index lost 602.7 points, or 1.49 per cent, to close at 39,720.75 points. It reached an intraday low of 662.7 points, or 1.67pc, around 2:08pm.

Topline Securities CEO Mohammad Sohail said share prices fell because of rising political noise and investor concerns about the country's low foreign reserves.

First National Equities Limited Chief Executive Ali Malik noted that volumes were very low and buyer interest was absent due to political and economic uncertainty.

He also attributed the slump to expectations that the interest rate would be raised by 1-2pc at the upcoming meeting of the central bank's Monetary Policy Committee, which he said would weaken companies' profitability.

'The market is panicking. It is not stabilising and the main reason is the dissolution of the Punjab Assembly and the talk of moving a no-confidence motion against Prime Minister Shehbaz Sharif,' commented former PSX director Zafar Moti.

He added that an increase in the benchmark interest rate would also have a negative impact on share prices. He also cited the situation at the ports, where import containers have been stuck for weeks as the central bank imposed curbs to limit the outflow of dollars amid the severe cash crunch.

'We cannot see the economy improving in the future and the political crisis in worsening,' he said.

Alpha Beta Core CEO Khurram Schehzad also agreed with Moti's view, saying he could not see much improvement in the near future because of a lack of...