PSX plunges by 1000 points over recession fears

KARACHI: The stock market opened to a disappointing start on Monday and plummeted by over a thousand points due to worrying concerns on the economic consequences of the coronavirus pandemic.

The World Bank has warned that Pakistan may fall in recession amid the health crisis. A report by the global lender released on Sunday stated South Asia is on course for the worst economic performance in four decades. It noted that Pakistan, which has already experienced low growth rates in recent years, could fall into a recession and a massive decline in per-capita income.

The stock market reacted strongly to the news about the adverse economic climate. The benchmark KSE 100 index plunged by 1000.22 points and closed at 31,032.99 points. This marks a significant decline of 3.12 percent. The top volume of shares was 126.266 million valued Rs5.34 billion as investors dumped stocks.

The lower bench KSE 30 index declined by 480.95 points (-3.39%) and closed at 13,724.25 points. The stocks remained in the red for most of the day as share prices of the top active stock declined. There was a decline in investment in all sectors despite the financial stimulus package announced by the government.

The oil and gas sector also dropped despite a historic cut in global supplies by top oil producing countries. Crude prices surged on Monday after OPEC agreed to reduce supply to 10 million barrels per as Saudia Arabia and Russia agreed to a deal. However, this did not have any impact on the local stock market as shares in the oil and gas sector and oil exploration sectors dropped.

The World Bank has also cautioned that South Asia will be next hotspot of coronavirus cases, despite recording fewer numbers than other parts of the world. It forecasts growth rate in South Asia, which comprises of eight countries, between 1.8% to 2.8%, well below the six percent rate projected over six months ago. The coronavirus pandemic has hammered the stock market as it disrupted supply chains and subdued investor’s confidence.