Stock markets in Pakistan today crashed with the KSE 100 index of Karachi Stock Exchange losing 2.5 per cent, or 441.62 points, as the ground-breaking ceremony of USD 7.5 billion gas pipeline project with Iran triggered fears of possible US sanctions.
"The slump is clearly a reaction to possible US sanctions after the gap pipeline ground breaking ceremony took place today," an analyst said.
The KSE-100 index shed 441.62 points to close at 17,522.56 points with 17.30 crore shares traded.
"Rumours spread about the US going ahead with possible economic sanctions and that led to investors wanting to unload their stocks," Capital investments' Hafiz Mansoor said.
The US has reacted strongly to Pakistan's gas pipeline deal with Iran which already faces US economic sanctions. And says it is already providing and will provide more alternative means to overcome its energy crisis.
President Asif Zardari flew to Iran on Monday and with his Iranian counterpart Mahmoud Ahmadinejad inaugurated the gas pipeline project in Chahbahar.
A consortium will start work on USD 7.5 billion gas pipeline from Pakistan to Iran and Monday's ceremony marked the start of work by an Iranian-Pakistan consortium on the 781 kilometre pipeline on the Pakistan side of the order going up to Nawabshah in Sindh province which is being built at a cost of $1.5 billion.
The pipeline on the Iranian side has almost been completed.
A spokesman for the government said the project had been undertaken keeping in mind the serious energy crisis being faced by Pakistan which needed to be resolved soon.
The government is awaiting a statement from the US State Department later today that will clear up a lot of things and define the future of Pak-US relations, which could determine the future course of the market, analysts said.
"If they are not possible signs of future sanctions than the stock market should recover strongly tomorrow," he said.
