Pakistan’s Karachi Stock Exchange crashes 6%

Stock market trading was stopped for an hour at the Pakistan Stock Exchange (PSX) on Thursday after its main index fell sharply. The sudden drop came as panic spread in the market following reports that drones had been shot down in major cities, including Karachi and Lahore.

According to the official notification from the exchange, trading was paused after the benchmark index plunged 6.3% in a short period. The sharp fall triggered automatic circuit breakers to stop further decline.

Market experts said that selling pressure increased after reports emerged that Pakistani military had shot down 25 drones from India. The military claimed these drones had entered Pakistan’s airspace.

Adnan Sheikh, Head of Research at Pak Kuwait Investment Company, said, “Reports of drones being shot down in major cities including Karachi and Lahore pushed the market down more than 6% in a short span of time, triggering a halt.”

Pakistan’s stock market had already been under pressure due to tensions with India. On Wednesday, the market had opened lower and later closed down by 3.1% after falling nearly 6% during the day. This marked one of the biggest drops in recent months.

Not just stocks, Pakistan’s international bonds also came under stress. Trade data showed that the 2036 bond maturity fell by more than 1 cent, now trading at 73.8 cents on the dollar. Investors pulled back fearing a wider conflict between the two neighbouring countries, both of which have nuclear weapons.

Jim Reid, global head of macro and thematic research at Deutsche Bank, said in a note, “The situation has raised fears about an escalation between the two countries. It also shows how the Global South is likely to become more important for the global backdrop.”