Stocks crash

The Pakistan Stock Exchange (PSX) tumbled over 1,000 points on Monday as the impact of the geopolitical tensions slammed markets around the world. The killing of top Iranian military commander Qassem Soleimani in Baghdad, by a US drone strike on Friday, has led to fears of war in the region, as major world leaders called for restraint to stabilise the highly volatile situation.

The PSX fell for most of the day, with analysts solely blaming the risks posed to Pakistan’s economy by the threat of an all-out US-Iran war. Major stock markets around the world have declined by over 3%. The KSE-100 index recorded a decrease of 1,027.06 points, or 2.43%, to settle at 41,296.24.

Tensions between Tehran and Washington have led to a global stocks sell-off and climbing oil prices fuelled by safe-haven buying in gold, according to analyst reports. A 2% increase in international oil futures has already been reported, and prices are expected to continue rising as long as tensions continue.

But one of the most substantial hits was in India, where the BSE Sensex closed 787 points or 1.9% lower on Monday, causing a loss of $42.8 billion to investors. Indian analysts placed the blame squarely on the Middle East crisis, noting that domestic events such as the violence at Jawaharlal Nehru University do not pose the kind of widespread economic threat that an Iran-US war does.

Japan saw the benchmark Nikkei 225 decline 1.91% to close at 23,204.86, while the Topix index fell 1.39% to 1,697.49. In South Korea, the Kospi index fell 0.98% to 2,155.07. Hong Kong’s Hang Seng index was down 1.11%.

Chinese mainland markets, however, went up: The Shanghai composite went up before flattening at 3,083.41, while the Shenzhen composite rose 0.44% to 1,768.68 and the Shenzhen component rose 0.39% to 10,698.27.

In Kuwait, stocks dropped more than 4%. Saudi Aramco went crashing as the Saudi Tadawul All Share Index lost 2.5%. Egypt’s EGX30 gauge fell 4.4%, and stocks in the United Arab Emirates, Qatar, Bahrain, Israel and Oman also weakened.

Let us end on a reminder. All this is just from the threat of war.

Published in The Express Tribune, January 8^th, 2020.

Like Opinion & Editorial on Facebook, follow @ETOpEd on Twitter to receive all updates on all our daily pieces.