KSE-100 Index down 1.45pc amid rising inflation and fading interest rate cut hopes
Business
Market is in dire need of some catalyst to kickstart a crippled economy
KARACHI (Web Desk) – The benchmark KSE-100 Index on Monday shed 953.60 points, or 1.45 per cent of its value, as rising inflation is killing the very hopes any rate cuts at the upcoming meeting of central bank’s Monetary Policy Committee.
The damaged investors’ sentiments resulted in selling pressure gripping the Pakistan Stock Exchange, as investors opted for financial security by disposing of their stocks.
Although Prime Minister Shehbaz Sharif has opted for Muhammad Aurangzeb to fill the finance minister slot, the market reaction clearly shows what the investors and businesses want – some catalyst to kickstart an economy crippled by high energy tariffs and interest rates.
Read more: Interest rates continue creating fissures between governments and central banks
Soon after taking oath, Aurangzeb promised to negotiate with the IMF to get the remaining amount of $1.1 billion released under the current Stand-By Arrangement (SBA) which will expire on March 31 and go another deal that will larger in volume and cover a longer period.
At the same time, he praised the Special Investment Facilitation Council (SIFC) and stressed the need for expediting the privatisation of lossmaking state-owned enterprises.
Read more: Aurangzeb advocates new IMF deal as energy tariff hikes keep fuelling inflation
However, such promises have no market value as it really difficult to attract foreign investment in the given environment of extremely high borrowing costs due to the fact that even domestic investors are reluctant to take any risk.
Another factor contributing to the belief that the State Bank of Pakistan will not decide in favour of rate cuts is the fact that the current inflation trend is showing the Federal Reserve – the global trendsetter – won’t go for any US rate cuts at least till June.
