Stocks tumble 714 points on rate hike concerns
KARACHI: The KSE-100 index plunged by a whopping 714.14 points (2.12 per cent) to close at over a three-year (39 months) low at 32,958.35. The market capitalisation eroded by Rs 115 billion in a day.
The market opened in the negative and was rocked by the analysts’ expectations over the State Bank of Pakistan monetary statement to be announced today (Tuesday) possibly after the close of trading hours. The consensus projection of analysts was a rate hike by 100 basis points.
“The interest rate rise in line with expectations would lead to an increase in the policy rate to 13.25pc, representing a cumulative increase of 750bps since January 2018,” said a fund manager. Mutual Funds, meanwhile, were the major sellers of equity worth $3.32 million, according to figures released by the National Clearing Company of Pakistan. Investors lost appetite for equities and shifted to risk-free fixed income securities that provided more attractive returns.