Current Pakistan economy issue 2020

After a brutal hammering seen in the past week, the stock market finished the outgoing week 236 points
up to settle at 38,220 points – a figure which does not aptly reflect the volatility that marred the
Pakistan Stock Exchange. With the total number of corona virus cases in Pakistan rising to six, and the
continuous rise in cases outside China (close to 20,000 now), the trickle-down effect of a global-sell off
in equities create pressure in the index. Trading kicked off on a refreshing note on Monday as the KSE-
100 index surged over 1,300 points in a single-day on back of significantly lower inflationary reading
for February. Inflation figures eased to 12.4% from 14.6% in the previous month, providing a much-
awaited respite for the investors as expectations of a cut in the interest rates rose. The development
created a positive sentiment in cyclical sectors, thus inviting buying interest. Furthermore, on the
international front, Asian shares also regained a measure of calm as investors pinned hopes on a likely
coordinated global monetary response to help soften the economic blow of the corona virus outbreak.
However, the positive momentum could not be sustained as the index retreated to the red zone amid
profit-taking by investors. The significant improvement in trade deficit also failed to spur any buying
action at the bourse. This trend continued as uncertainty in global equity markets and persistent selling
by foreign investors pulled the index further down. Moreover, outflow of hot money also sparked
concern among investors and dented overall sentiments. The falling bond yields and speculations of a
rate cut in the central bank’s monetary policy once again fuelled a bullish rally at the PSX. Trading
volumes and value soared as market participants resorted to across-the-board share trading. Once again
the bull-run was short-lived as the index bled in the last trading day of the week, losing over 1,100
points in line with the turmoil in global markets.