Pakistani stocks today plunged 4.6 per cent as political crisis sparked by calls for anti-government marches led to panic selling of shares.
The stocks fell as Pakistan braced for two anti-government rallies on August 14, the country's Independence Day.
Canada-based Pakistani cleric Tahirul Qadri and and cricketer-turned-politician Imran Khan are preparing for the rallies to demand the ouster of the Nawaz Sharif government.
Both have called for a new political system and reforms in the country's political system.
The Karachi Stock Exchange (KSE) index lost 1,375 points or 4.6 per cent plunging the market down to below 28,000 points after the market had surged to a record 31,000 late last month before the Eid holidays.
Muhammad Sohail of Topline Securities said the plunge in the market was the direct result of the panic selling of shares by local investors due to the political uncertainty in the country and talks of the Nawaz Sharif government being overthrown.
Political analysts believe that marches could lead to the fall of the government and the holding of mid-term elections.
"The situation is not that bad but the KSE has historically not been good at reading the political landscape. But once things settle down and reality sets in the market will recover strongly," he told PTI.
Giving an example he said that prior to the 2013 elections Tahirul Qadri was perceived as a big threat to the stability of Pakistan's political system.
"Seasoned equity analysts wrote reports and as Qadri's pre-rally campaigns reached fever pitch in mid-January 2013, the KSE-100 index dropped 500 points in one day," he recalled.
Intikhab Ahmed of Capital Investments said, "It is only after the marches when the situation becomes clear that investors will settle down. Right now there is panic selling of shares going on."
The KSE has generally been raising its stocks since the Sharif government took over last year after the elections with foreign and local investors showing more confidence in the economic reforms initiated by the Prime Minister.
