Chundrigar Catastrophe: How economic indicators made the PSX crash The stock market might not be an indicator of the economy, but the economy has a long, invisible, hand By Ariba Shahid
B
oxing Day Sales came early with the PSX crash. Stocks are now cheaper than they were before. The index flirted with a market halt nearly touching it throughout the trading day. Had the market plunged 5%, we would have seen a market halt, the first of its kind following March 2020. Stocks on Thursday recorded their worst single-day fall in more than 20 months, with investors stuck in a selling frenzy over economic fallout from ballooning trade deficit and fears
24
of another rate hike. The MPS policy came early this month, earlier than usual because the SBP could anticipate angst in the market. The last time the PSX witnessed a market halt was when equities around the world plunged in light of COVID 19 due to uncertainty regarding the global economy, liquidity crunches, and loss of productivity for businesses due to lockdowns. So what really triggered this? What went so wrong that the market went into absolute mayhem. “It’s a knee jerk reaction to mainly a couple of factors,” says Fahad Rauf, Head of Research at Ismail Iqbal Securities.
The reasons behind Thursday Turmoil?
W
e’re going to attribute this to three major reasons, the current account deficit, the debt market yields, and
sentiments.
The current account deficit
T
he Pakistan Bureau of Statistics (PBS) on Thursday released data which showed that the trade deficit widened to $20.6 billion in the first five months of the
