KARACHI (Reuters) – Pakistani stocks fell over 4 percent in early trade on Wednesday to their lowest level in more than two years as investors sold blue chips such as OGDC amid persistent political uncertainty in the country.
By 0455 GMT, the benchmark Karachi Stock Exchange index was down 4.4 percent at 9,020.50 points, a level last seen in June 2006.
Dealers said the steady decline in the market in the past week and uncertainty over the future of the government were unnerving investors, who were selling their shares to raise money to cover losses.
“There is still a lot of uncertainty on the political front. People just want to get out of the market,” said Sajid Bhanji, a dealer at Arif Habib Ltd.
“People were selling on margin calls,” he said.
The coalition government broke up on Monday after the alliance’s second biggest party, headed by former prime minister Nawaz Sharif, pulled out.
The Pakistani rupee, which is hovering near a record low, strengthened slightly on Wednesday. It gained 0.2 percent to 76.30 against the dollar.
The stock market has fallen for six consecutive sessions since August 20, snapping a two-day recovery after President Pervez Musharraf’s resignation. The KSE index has lost 43 percent since hitting a record high of 15,739.28 points on April 21.
Pakistan’s stock market, which rose for six consecutive years from 2002, and was one of the top performers in Asia during that period, has skidded 36 percent this year on political tension and a shaky economy.
Inflation in Pakistan is soaring, the trade and fiscal deficits are falling, high oil prices have depleted foreign exchange reserves. Investors are worried political tension will slow foreign investments, making it hard for Pakistan to pay for imports.
Energy company OGDC, Pakistan’s biggest firm by stock market value, was down 5 percent.
The privatization commission said on Tuesday it was assessing privatization options for OGDC such as selling shares and assets including Qadirpur Gas Field on a “fast track basis”.
MCB Bank, Pakistan’s biggest bank by market capitalization, was down 5 percent, and state-run Pakistan Petroleum fell 4.6 percent.