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The Pakistan stock market experienced a significant rebound on Friday, May 9, after enduring four consecutive days of losses. This recovery comes in the wake of heightened tensions between India and Pakistan, which had previously spooked investors and led to a substantial downturn in the market. The Karachi Stock Exchange 100 (KSE-100) index, a key indicator of market performance, showed signs of resilience, climbing by 1,026 points, or 1%, to reach 103,700 as of 2:20 IST, according to data from Bloomberg. Earlier in the trading session, the index had even surged by as much as 2%, signaling a strong initial response from investors. The preceding days had been marked by considerable volatility. On Thursday, the benchmark index had plummeted by over 6% during intraday trading, triggering a temporary halt in trading activities. Over the course of the previous four trading sessions, the KSE-100 index had cumulatively lost 9.5% of its value, reflecting the deep concerns and uncertainties gripping the market. Looking further back, since April 22, the day of the Pahalgam terror attack, the index had suffered a decline of 12.5%, underscoring the sustained impact of the geopolitical situation on investor sentiment.
The escalation of tensions between India and Pakistan can be traced back to a terror attack on civilians in Pahalgam, Kashmir, which resulted in the tragic loss of 26 lives. In response to this attack, Indian military forces conducted strikes against nine targets in Pakistan and Pakistan-occupied Kashmir. These strikes were described as “precise and restrained” and were designed to be “non-escalatory in nature.” However, the situation remained volatile, and on Thursday night, India reportedly thwarted Pakistan's attempts to strike military sites with drones and missiles, including in Jammu and Pathankot. According to a PTI report, similar bids had been foiled at 15 locations in northern and western regions of the country, further exacerbating the tensions and fueling fears of a wider conflict. The tense atmosphere has also had a palpable impact on the Indian stock market, which experienced a setback after demonstrating resilience in the face of rising tensions. As of 11:55 am, the BSE Sensex was down 750 points, or 0.94%, at 75,580 levels, while the NSE's Nifty 50 hovered at 24,041, down 230 points, or 0.96%.
Amidst the escalating tensions, Pakistan’s Ministry of Economic Affairs has made a direct appeal to international partners for additional financial assistance in the form of loans. Citing heavy economic losses and a stock market crash, the ministry took to social media platform X to express its concerns and to request international support. The post stated, “Govt of Pakistan appeals to International Partners for more loans after heavy losses inflicted by enemy. Amid escalating war and stocks crash, we urge international partners to help de-escalate.” This appeal underscores the significant economic ramifications of the ongoing tensions and highlights Pakistan's reliance on international aid to mitigate the financial impact. The request for loans suggests that the Pakistani government is facing considerable challenges in managing the economic fallout from the conflict and is seeking external support to stabilize the situation. The situation reflects a complex interplay of geopolitical tensions and economic vulnerabilities, requiring careful monitoring and strategic responses from both domestic and international actors. The stability of the region hinges on de-escalation and peaceful resolution of the conflict, as well as effective economic management to address the financial consequences.
Source: Pakistan stock market: KSE 100 index rebounds after 4-day beating on India-Pakistan tensions