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Market nosedives as hopes of Chinese aid die down  


Photo: AFP

The stock market was in a free fall right after trade opened on Monday as there was no news of an aid package from Beijing even on the last day of Prime Minister Imran Khan’s visit to China.

The premier’s visit to China was the biggest trigger that has been driving market sentiments over the past few sessions. Investors’ expectations that the PM’s visit would result in some ‘good news’ helped the benchmark KSE-100 index close above 42,000 points, its highest level in the last nine weeks.

However, the index, a gauge to measure the market performance, plunged on Monday, shedding over 2% or 900 points in the early trading hours, putting an end to the last week’s rally.

Investors are disappointed because the Chinese didn’t commit any aid package as opposed to the market expectations, say analysts.

Related: Saudi aid helps stock market record highest gain in three-and-a-half years

The market remained bullish since the PM’s last month’s visit to Saudi Arabia. The friendly country pledged $3 billion in the balance of payment support and another $9 billion ($3 billion per year for three years) in oil credit. The package would help Islamabad shore up its dollar reserves, standing at a critically low level of $7 billion, to avoid a default on foreign payments.

The market was expecting a similar package from China, which kept investors bullish and caused a rally last week.

The PM’s visit is concluding on Monday (today), but no official announcement has been made as yet regarding any Chinese loan. The two countries have signed 15 agreements and memorandums of understanding for cooperation in diverse fields, but details have not been released yet. However, investors say no dollars were committed by the friendly country, which is why the market was bearish (down).

Market analysts attributed the current investor sentiments to the PM’s visit, but a couple of them also said the Chinese may take a while before committing anything, unlike the Saudis who needed Islamabad’s support on political and diplomatic issues.

Majority of analysts we spoke to ruled out any link between how the government handled recent protests by the right-wing religious party and the current market situation. However, they also cautioned these protests could affect the market negatively if they turn into something big and problematic.






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