By Ariba Shahid and Karin Strohecker
KARACHI (Reuters) -Pakistan’s benchmark index closed down 6.7%, recording its largest single-day points drop, while its bonds were also under pressure following reports of drones being shot down in major cities including Karachi and Lahore.
Trading at the Pakistan Stock Exchange was halted for an hour on Thursday after the benchmark index plunged 6.3%, a notification from the exchange showed.
Pakistan’s international bonds were also sold, with the 2036 maturity suffering the biggest losses, down more than 2 cent to be bid at 72.4 cents in the dollar, Tradeweb data showed.
Pakistan shot down 25 drones from India that violated its airspace, the military said on Thursday, a day after Indian strikes on multiple targets in the country fanned fears of a larger military conflict between the nuclear-armed neighbours.
“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,” said Adnan Sheikh, head of research at Pak Kuwait Investment Company.
The country’s benchmark share index had fallen 3.1% on Wednesday.
“The situation has raised fears about an escalation between the two counties, and it represents another example of how the Global South is likely to prove increasingly important for the global backdrop,” Jim Reid, global head of macro and thematic research at the Deutsche Bank, said in a note.
India’s Foreign Secretary Vikram Misri said on Thursday that India’s executive director at the International Monetary Fund would represent the country’s position at a board meeting on Friday, where a $1.3 billion loan to Pakistan will be reviewed.
The IMF, in a response to questions from Reuters, said on Wednesday it supported Pakistan’s economic programme through its Extended Fund Facility and hoped for a “peaceful resolution and de-escalation between the two parties”.
(Reporting by Ariba Shahid in Karachi and Karin Strohecker in London; Editing by Christian Schmollinger and Alex Richardson)
