Stocks Near 2-Week Low On Coalition Split Fear
Monday, August 25, 2008 at 6:26 pm
KARACHI :Shares in Karachi stock market fell 1.8 percent to close at a near two-week low on Monday as mounting investor doubts about whether the coalition government will stay intact spurred selling in financial stocks such as MCB Bank.
The benchmark Karachi Stock Exchange (KSE) index closed down 1.8 percent at 9,813.66 points, a level last seen on Aug. 13. Around 6 million shares were traded.
Investors said they were sceptical the coalition can quickly resolve the outstanding issues threatening to tear the alliance apart, including the restoration of judges ousted by former president Pervez Musharraf last year.
“Investors are viewing the (political) meetings sceptically,” said Mustafa Iqbal, head of institutional sales at AKD Securities.
“If the coalition splits, the chances of a harmonious government in the next five years are not going to be there,” Iqbal said.
Ruling coalition government looked on the verge of splitting on Monday over disputes about the judiciary and who should be the next president.
The party led by former prime minister Nawaz Sharif has repeatedly threatened to leave the coalition if the judges are not restored, and was meeting on Monday afternoon to consider its position. It is due to hold a news conference at 6 p.m. (1200 GMT).
The stock market, which rose for six straight years from 2002, and was one of the top performers in Asia during that period, has lost about a third of its value this year.
As of Friday’s close, it was the third worst-performing market in Asia after China and Vietnam.
In addition to politics, Pakistan’s sickly economy has dragged on the market. Inflation is soaring, high oil prices have depleted reserves, and trade and fiscal deficits are widening.
MCB Bank, Pakistan’s largest bank by stock market value, was down 3.8 percent. The National Bank of Pakistan, which has the largest bank network in Pakistan, fell 5 percent. Standard Chartered Bank Pakistan was down 5.3 percent.
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