UPDATE 3-Foreign selling drives Pakistani stocks down over 4 pct
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KARACHI, July 16 (Reuters) - Pakistani stocks fell over 4 percent to their lowest level for more than 18 months on Wednesday in selling led by foreign investors, fearful of policy drift, political uncertainty and weak economic fundamentals.
The Karachi Stock Exchange benchmark (KSE) 100-share index ended down 4.27 percent, or 467.99 points, at 10,491.88.
The KSE-index closed at 10,425.46 points on Jan 12, 2007.
"Foreign investors are selling where ever they find an exit," said Shuja Rizvi, director of broking operations at Capital One Equities Ltd.
According to official data, there was a net outflow of $14 million from the stock market on Tuesday.
The KSE-index has shed 25.5 percent since the start of the year and is 33.3 percent lower than its life high on April 21.
Dealers said investors perceived lack of clear strategy in government policies.
Foreign investors' losses have been compounded by a 15.3 percent depreciation in the rupee against the dollar so far this year.
"Rather than a series of meetings that end with rhetoric, the economic managers of the country need to step up and induce the level of confidence such that local institutions sitting on cash feel comfort in stepping into the market," said Asad Iqbal, Managing Director at Ismail Iqbal Securities Ltd.
The market has been adjusting since Monday after the relaxation of curbs on daily movements that had been tightened in late June to halt a precipitate fall in values.
From Monday, daily circuit breakers reverted to 5 percent up or down, having been amended to 1 percent down or 10 percent up in late June, in a move that stifled trading volume.
Dealers said there were worries of another rate hike in the upcoming monetary policy due to be announced in the coming weeks.
The central bank raised interest rates to 12 percent from 10.5 percent in May which also put pressure on the stock market as dealers said in uncertain times, an investor would rather invest in a bank, than capital markets, and get a risk-free 12 percent return.
A new coalition government, sworn in more than three months ago, has sought help from multi-lateral lenders and friendly governments to stave off the economic threats as the country tries to cope with soaring import costs.
Inflation has accelerated to a three-decade high above 21 percent in June and the fiscal and current account deficits have widened to unsustainable levels, largely because of a soaring oil import bill.
Among the most active companies, World Call Telecom (WCTL.KA) fell 8.1 percent to 11.34 rupees, NIB Bank (NDIF.KA) fell 10.30 to 8.70 rupees, while Hub Power Co Ltd. (HPWR.KA) was down 4.28 percent to 24.60 rupees.
Volume was over 57.1 million shares with losers leading gainers by 237 to 25. (Reporting by Sahar Ahmed and Aftab Borka; editing by Simon Cameron-Moore)
