PSX crashes by 1716 points as global stocks sink over coronavirus

KARACHI: There was carnage at the Pakistan Stock Exchange (PSX) on Thursday as stocks plunged over 4.77 percent within a day due to global risks and economic effects of the novel coronavirus.

The benchmark KSE 100 index plunged by a whopping 1716.56 points in intra-day trading and closed at 35,956.69 points. Earlier today, trading was halted to reign in the downward trajectory. The bourse was down by 3.6 percent (1324 points) to 36.349 at 2:15 PM forcing to halt trading as per rules.

According to new rules, trading is halted for 45 minutes if the KSE 30 index moves from four percent for a consecutive five minutes. The lower bench KSE 30 index was down 4.36 percent or 708 points at 16,220 at 2:15 PM. The bourse eventually closed with a decline of 936.44 points (-5.53 percent) at 15,922.37 points.

This is the second within the week which as witnessed a bloodbath on the stock market. The bourse declined on ‘Black Monday’ by 1160 points due to the coronavirus and plunged in crude oil prices.

Global stock markets tumbled as US President Donald Trump announced a thirty-day ban on travel to the USA from Europe over the coronavirus. The World Health Organisation has also officially declared the spread of the outbreak as a pandemic.

Asian markets were already a sea of red but Trump’s announcement on a European travel ban caused further selling despite the promises of an economic stimulus and further measures to ease the financial loss from the outbreak.

Tokyo’s benchmark Nikkei was down 5.42 percent or 1,051.88 points to 18,364.18, while the broader Topix was down 5.06 percent or 70.15 points to 1,314.97 in the hour after Trump’s address. Australia’s ASX was down 5.4 percent, while Hong Kong tumbled three percent at the open.

The stock market received a hammering due to the global panic and chaos over the coronavirus and travel-related restrictions. The downward trend at the local stock market was an effect of prices in regional and international markets.

The devaluation of the Pakistani rupee as compared to the US dollar also compounded the miseries of the stock market. The greenback declined by Rs1.76 and is being traded at Rs158.42 against the dollar.

According to the State Bank of Pakistan, the local currency witnessed a fresh drop of one rupee and depreciated by Rs4.18 or 2.71 percent to the US dollar in interbank rate for the past three days.

The coronavirus outbreak has left virtually no sector untouched, brought travel to a standstill and hit businesses around the world. The markets struggled under the weight of twin crises – the burgeoning coronavirus outbreak and an oil price war.

Oil prices also fell sharply after Trump’s comments, plunging more than five percent. The oil market was already under pressure after Saudi Arabia stepped up a price war to flood global markets.