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Pakistan, October 14 – Increased tensions along the Pakistan-Afghanistan border during the weekend caused ripples in financial markets, leading to fear at the Pakistan Stock Exchange (PSX) on Monday.

Investor confidence experienced a significant decline, as the KSE-100 index dropped more than 4,500 points in one trading day due to growing concerns about regional instability. The stock market fell by 4,654 points, closing at 158,443.

The stock market crash came after reports of violent clashes along the Pakistan-Afghanistan border, where at least 23 Pakistani soldiers were killed and more than 200 militants were reportedly eliminated in an attack believed to have originated from Afghanistan, as stated by the Inter-Services Public Relations (ISPR).

The increase occurs as the PSX was already experiencing pressure, with investors concerned about the uncertainty regarding Pakistan’s IMF program and the overall economic situation. The KSE-100 index fell 3.5% last week, closing at 163,098.19 points, affected by reduced trading volumes and selling off following a turbulent opening.

The Head of Equity Research at JS Global, Waqas Ghani, stated to The Express Tribune that the market has dropped approximately 9,500 points over the past six sessions, fueled by negative investor sentiment due to increasing border tensions between Pakistan and Afghanistan. “The index fell to an intraday low of 5031 points, a decrease of 3.1% because of geopolitical concerns that led to widespread selling in major sectors such as banking, energy, and cement, with investors showing caution.”

KTrade Securities’ equity trader, Ahmed Sheraz, noted that the PSX is still suffering due to a series of adverse events, with the KSE-100 index dropping around 4,654 points (-2.85%) to finish at 158,443 points.

Market sentiment, already weak because of declining hopes for a policy rate reduction in the upcoming Monetary Policy Committee (MPC) meeting and increased attention from the International Monetary Fund (IMF) as it reviews its ongoing program, has been further damaged by worsening security situations.

In addition, the latest series of terrorist attacks, which resulted in the deaths of multiple security officers, has greatly affected investor trust. Pakistan has taken measures against banned factions of Tehreek-i-Taliban Pakistan (TTP) located across the border in Afghanistan.

Hostilities have also been escalating since police confrontations with Tehreek-e-Labaik Pakistan (TLP) occurred last week, initially in Punjab and later throughout the nation. These events have added new levels of unpredictability to the stock exchange.

In light of the unstable security situation and the important IMF assessment taking place, Sheraz anticipates that market sentiment will stay very responsive in the short period. Any changes in either area are expected to have a major impact on investor actions and the overall market trend, he mentioned.