Pakistan Stocks Enter Bear Market After Political TurmoilBy
Benchmark KSE100 Index drops 20% below record peak in May
Foreigners dump stocks after MSCI emerging market upgrade
Pakistan stocks entered bear market territory as political turmoil continues to drag in South Asia’s second-largest economy after the ousting of former premier Nawaz Sharif last month.
The benchmark KSE100 Index declined 2.2 percent at the close in Karachi, extending declines to 20 over percent from a peak in May. Pakistan’s stock market is the third worst performer globally this year, according to 96 primary indexes tracked by Bloomberg.
Investors “are spooked by ongoing the political noise while emerging market funds didn’t take any keen interest in Pakistan’s story after the MSCI upgrade,” said Sibtain Mustafa, associate director at Exotix Partners LLP in Dubai. “It’s not a doomsday scenario yet and personally I see reversals.”
Pakistan’s top court disqualified Sharif as prime minister after an investigation into his family’s finances. Sharif, who has held multiple public rallies across the country in a show of power and faces a criminal investigation by the nation’s anti-corruption agency , has denied any wrong-doing and has requested a review of the decision.
While MSCI Inc. upgraded the nation to emerging-markets status from frontier in June, foreign investors have sold Pakistan equities worth $433 million this year, the most since global financial crisis in 2008.