Pakistan Halts Trading as KSE-30 Crashes 7.2%

KSE Indexes Crash Following Indian Strikes; Trading Suspended Amid Panic

Pakistan’s stock market witnessed a dramatic collapse on May 8, with the KSE-30 index plunging 7.2% in a single session, triggering a market-wide trading halt. The crash comes on the heels of India’s targeted military strikes against terrorist hideouts across Pakistan under ‘Operation Sindoor,’ which followed the Pahalgam terror attack in Kashmir that killed 26 civilians on April 22.

As of 1 PM, the broader KSE-100 index had also fallen by more than 6,000 points, down over 5% to trade near the 104,087 mark. This extended the heavy sell-off that began after the terror attack, with the KSE-100 falling 13% and the KSE-30 crashing 14.3% since April 22. The sharp plunge has created panic across domestic institutional investors, with retail sentiment deteriorating rapidly amid fears of escalating military and geopolitical instability.

Highlights:

• KSE-30 crashes 7.2%, halting market trading in Pakistan.

• KSE-100 index falls over 5% or nearly 6,000 points to 104,087.

• Indices have plunged over 13%–14% since the April 22 Pahalgam attack.

Market Sentiment Erodes Despite Recent Rally Driven by IMF and Ratings Boost

Until the resurgence of India-Pakistan tensions, Pakistan’s equity market had been enjoying a historic bull run. In 2024, the KSE delivered its highest annual return in over two decades—84%—fueled by global investor interest and macroeconomic optimism. International players like BlackRock and Eaton Vance had ramped up their exposure to Pakistan’s $50 billion stock market, buoyed by a sovereign credit rating upgrade and falling global oil prices.

The sharp reversal, however, underscores the fragility of sentiment in frontier markets like Pakistan, which are highly susceptible to geopolitical shocks. The fallout from ‘Operation Sindoor’ has erased billions in market value in just days, prompting regulators to halt trading in a bid to contain volatility.

Highlights:

• Pakistan’s market had posted 84% returns in 2024, attracting global funds.

• Gains were driven by IMF bailout success, falling oil prices, and improved credit rating.

• Geopolitical risk has rapidly reversed sentiment, triggering a crisis of confidence.

IMF Extension Decision Awaited as Market Eyes Macroeconomic Stability

Amid the growing turmoil, all eyes are now on the International Monetary Fund (IMF), which is expected to decide tomorrow on whether to extend its existing funding facility for Pakistan. The IMF’s decision could determine the future trajectory of financial stability in the country, which is now grappling with rising fiscal stress, inflation, and growing military expenditures.

Analysts warn that a delay or rejection of the IMF extension could lead to further capital flight and deepen the stock market rout. With the country’s forex reserves and currency already under pressure, investor focus will remain sharply fixed on multilateral support.

Highlights:

• IMF decision on funding extension expected tomorrow.

• Market stability hinges on continued IMF support amid rising war-related uncertainty.

• Forex, fiscal outlook remains vulnerable to prolonged conflict.

India on High Alert as Pakistan Shells Civilians Across LoC

In a disturbing escalation, Pakistan’s military reportedly launched heavy shelling across the Line of Control (LoC) in the Kupwara district of Jammu and Kashmir early on May 8, targeting civilian areas in the Karnah sector. The shelling occurred barely a day after India launched strikes under Operation Sindoor, escalating fears of direct military engagement.

Pakistan’s Defence Minister Khawaja Asif has openly warned that the risk of nuclear conflict is “definitely present,” intensifying fears of broader instability in the region. In response, Indian authorities have placed national security installations on high alert and tightened military readiness across key border states.

Highlights:

• Pakistani troops resort to cross-border shelling in Kupwara after Indian strikes.

• India placed on high alert amid fears of further retaliation.

• Defence Minister Khawaja Asif warns of real nuclear war risks.