0
KARACHI: Pakistani stocks ended almost 2.4 per cent lower on Wednesday amid concerns that the killing of Osama bin Laden this week could lead to a delay in international aid, dealers said.
The Karachi Stock Exchange's benchmark 100-share index was 2.38 per cent, or 284.84 points, lower at 11,672.05 on turnover of 89 million shares.
The KSE-index has lost 3.2 per cent since the US Raid that killed bin Laden. The index gained about 28 per cent in 2010.
“There is concern that there may be a delay of aid, especially from the International Monetary Fund (IMF), after news that visits of all missions have been cancelled,” said Sajid Bhanji, director at brokers Arif Habib Ltd.
All missions from international financial institutions, including the IMF, the World Bank and the Asian Development Bank have cancelled visits to Pakistan, expecting a backlash following bin Laden's death, one local media report said.
The IMF declined to comment and no-one was available at Pakistan's Finance Ministry.
One foreign institution official, requesting anonymity, said that there were some delays in missions to Pakistan due to security issues.
Last month a senior IMF official said he hoped to send a team to Pakistan in the next couple of weeks to assess the progress, but said the IMF has not decided yet when it is going to disburse the remaining two tranches, totalling more than $3 billion, of its total $11 billion loan.
Pakistan is facing a financial crunch brought on by Pakistan's widening fiscal deficit in the aftermath of last summer's devastating flooding that caused an estimated $10 billion worth of damage.
Dealers said there were also worries over the future of aid from the United States.
“Concerns that US may cut aid to Pakistan after the death of Osama Bin Laden carried market down by more than two per cent,” said Samar Iqbal, a dealer at Topline Securities Ltd.
Irate US lawmakers, already doubtful of Pakistan's cooperation against al Qaeda, have questioned how it was possible for bin Laden to live near a military training academy without the knowledge of Pakistan's administration, and have called for a review of aid to Pakistan.
The US Congress has approved $20 billion for Pakistan in direct aid and military reimbursements, partly to help Islamabad fight militancy and following the Sept. 11 2001 attacks on the US by al Qaeda.
“Our government is in fiscal distress. To make contributions to a country that isn't going to be fully supportive is a problem for many,” said Senate Intelligence Committee Chairwoman Dianne Feinstein.
In the currency market, the rupee ended weaker at 84.66/72 to the dollar, compared with the previous day's close of 84.28/35 amid increased demand for dollar for import payments, dealers said.
Dealers said the rupee was expected to remain stable in the short run following bin Laden's killing, but its medium- to long-term outlook depended on whether the United States would lose interest in the region, and what impact this would have on funding.
In the money market, overnight rates were flat at 11.10 per cent, unchanged from Tuesday's close, and dealers said rates are likely to stay on the lower side amid increased liquidity in the interbank market.
