KSE-index slide amid election uncertainty

Share prices in Karachi stock market fell for a second straight day on Tuesday as investors waited for a clearer picture to emerge of the country’s political crisis.

The Karachi Stock Exchange 100-share index tumbled as much as 3.8 percent in early trade, after last week’s killing of former premier Benazir Bhutto unleashed a wave of violent unrest and threatened instability in Pakistan.

The Election Commission is due to decide on Tuesday whether to delay elections set for Jan. 8 after Bhutto was assassinated in a gun-and-bomb attack last Thursday at a campaign rally.

“There is an element of nervousness and anxiety within the market. And a delay in the election schedule may add further to the anxiety,” said Tariq Choudhry, head of sales at Invisor Securities.

The index recovered some ground in morning trade. By 0530 GMT, it was down 2.6 percent at 13,709.85 points. Several stocks fell 5 percent, the market’s allowed limit, including mid-tier stocks Attock Petroleum and broker Arif Habib.

Since the assassination, the market has lost about 7 percent.

Bhutto’s murder threw into doubt a smooth transition to civilian-led democracy after almost a decade of military-backed government under President Pervez Musharraf. It also unleashed mob violence, especially in southern Sindh province, Bhutto’s political stronghold and home to Karachi, the financial hub.

On Monday, financial markets gave their first reaction to the killing, pushing the stock index down 4.7 percent, its steepest dive in 18 months, and dragging the currency to a six-year low.

The share market is the only domestic financial market that opens on New Year’s Day and dealers say thin volumes suggest many investors are still reserving judgment on the crisis.

“Most players would be looking for an exit strategy. No one would be ready to take new positions. Announcement of elections on schedule can help the market sentiment, but only slightly,” said Shuja Rizvi, director of broking, Capital One Equities.

Bhutto’s party says it wants elections to go ahead next week as planned and has chosen her widower, Asif Ali Zardari, and her 19-year-old son as joint party leaders, with her deputy, Makhdoom Amin Fahim, seen as the most likely prime ministerial candidate.

Political analysts say Bhutto’s Pakistan People’s Party would win a large sympathy vote if polls were held on Jan. 8 whereas a long delay could help the PML (Quaid), a party allied with President Musharraf who took power in a 1999 military coup and is under intense pressure to return to civilian rule.

“The uncertainty should also reduce a bit with the announcement of the elections schedule. We should see some support around 13,500-13,600 (points),” said Mohammed Sohail, director of equity broking and research at JS Global Capital.