The Pakistan Stock Exchange endured a bloodbath on Thursday and the KSE-100 index slid over 1,700 points in intra-day trading as lofty import figure for November shattered investor sentiments.
The market expects the import number for the past month to amount to all-time high of around $8 billion which would widen the current account deficit further.
On the other hand, a surge in yields of T bills on Wednesday’s auction signaled further monetary tightening by the State Bank of Pakistan in the forthcoming monetary policy announcement on December 14, 2021.
These two factors jointly hammered the bourse on Thursday and sparked profit booking from investors who rushed to safeguard their positions.
At 12:17 PM, the KSE-100 index was trading at 43,664.8 points following a plunge of 1,704.34 points or 3.76%.
Speaking to The Express Tribune, Arif Habib Limited Head of Research Tahir Abbas stated that the dip was witnessed owing to anticipation of all time high imports of $8 billion in November.
“This can widen the current account deficit to an unsustainable level of $2.3-2.5 billion,” he said. “Besides, there seems to be no respite from the soaring import bill however $650 million was spent on vaccine shipments in November which can be curbed going forward.”
He pointed out that the cut off yield on six-month T bills spiked to 11.5% on Wednesday’s auction compared to 10.1% in the last auction which took place before the announcement of monetary policy.
The increase indicates yet another hike in the benchmark interest rate by the State Bank of Pakistan in the upcoming monetary policy during mid-December, he said.