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Iran’s allegation that Pakistan played a role in the suicide attack that took the lives of 15 senior Revolutionary Guard members, combined with a fresh wave of terrorist attacks in the country, wiped out US$2.41 billion worth of capital from the Karachi Stock Exchange (KSE) in just five days, market analysts revealed on Oct. 23.
KARACHI — Iran’s allegation that Pakistan played a role in the suicide attack that took the lives of 15 senior Revolutionary Guard members, combined with a fresh wave of terrorist attacks this month in the country, wiped out US$2.41 billion worth of capital from the Karachi stock market in just five days, market analysts revealed on Oct. 23.
“The market capitalisation of the KSE declined to $31.9 billion on Oct. 23, from $34.3 billion on Oct. 19,” said Pearl Capital CEO Saad Bin Naseer.
Iran’s accusation and terrorist attacks in the country triggered panic among foreign and local investors.
From Oct. 19 to 23, the benchmark KSE Index lost 677 points or 6.8 percent, as investors resorted to heavy selling, Naseer said. On Oct. 19, the first trading day after Iran’s allegations, the KSE witnessed a 426 point decline, the biggest drop in 18 months, he added.
“Between July and mid-October, foreign investors put more than $450 million in the KSE, as it was showing robust growth in light of an increase in credit by the IMF, donations at a conference of Friends of Democratic Pakistan and U.S. Congressional approval of the Kerry-Lugar Bill,” said Ahmed Nabil, a senior finance official.
In last few days, foreign investors sold $800 million in shares traded on the KSE, which in turn upset the market and local investors.
Despite sporadic terror attacks from July to mid-October, the market grew by 21 percent, Nabil said. In July, the market capitalisation of the KSE was $25.3 billion. It rose to $34.3 billion by Oct. 16, a day before the suicide attack on the Revolutionary Guards.
As the market started trading after two weekly holidays on Oct 19, investors shocked by Iran’s allegation hastily unloaded shares, derailing the entire market, he said.
“Investors are now reluctant to buy; they are waiting for the normalisation of ties between Iran and Pakistan, and for success in the military operation against the Taliban in South Waziristan,” he said.