Pakistan Stock Exchange suspends trading briefly amid global market carnage

Pakistan's benchmark share index- Karachi Stock Exchange (KSE)- slumped 6 per cent, or more than 7,200 points on Monday following the tumble in global markets, which led to suspension of trading in the index. A 45-minute market halt was triggered amid the rampant selloff across the globe.

The benchmark index rose last week after Pakistan slashed energy tariffs for domestic and industrial users, despite global markets plunging following the US decision to place new tariffs on trade with countries. However, the index managed to post marginal recovery as the trading resumed.

The PSX halts trading as a safeguard against panic selling. These automatic circuit breakers give investors a chance to reassess during extreme market volatility. Trading paused for 45-60 minutes and trading resumed at 1:03 pm local time. Analysts attribute the drop to global recession fears.

The PSX suspension occurs after a 5% decrease in the KSE-30 index from the previous day. This leads to the cancellation of all outstanding orders. According to a statement by PSX, the market resumes after the cooling-off period. Analysts like Yousuf M. Farooq, director at Chase Securities, emphasize that a global recession has impacted markets broadly.

Pakistan was not the sole Asian market to see trading halt. Exchange operators in Japan and Taiwan had to briefly call a halt to trading to pause panic selling as investors wagered the mounting risk of recession could see US interest rates cut as early as May. Other Asian markets saw a bloodbath, eking out up to 9 per cent on Monday.

Investor morale in the euro zone was also hit with pessimism. European shares plunged to a 16-month low on Monday as investors grappled with the possibility of a recession. The pan-European STOXX 600 crashed 5.8 per cent, on track for its steepest one-day percentage decline since the covid-19 pandemic.

A German online broker Trade Republic said that it suffered technical problems for some users "due to enormous market fluctuations" but that the issue had been resolved, reported Reuters. US Stock futures were signaling a 8 per cent fall on Monday, spooking the investor sentiment further.