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Index tumbles 3pc

KARACHI - Pakistani stocks tumbled as much as 3 per cent on Friday as a record-low rupee and growing uncertainty about the future of the fractious coalition government fuelled selling of blue chips such as OGDC.

The benchmark Karachi Stock Exchange index fell as much as 3.02 per cent at a one-week low of 9,907.26 points. It pared losses and by the end of trade was down 2.4 per cent at 9,993.81.

Investors said the rupee, which sunk to a record low on Friday, further hit investor confidence already battered by persistent political wrangling in the country.

They said continued political tension will distract the government from pressing economic problems, and encourage more investors to flee Pakistan's financial markets.

"The rulers are not worrying about the economy where the situation is deteriorating day by day," said Sajid Bhanji, a trader at Arif Habib Limited. He said foreign investors were among the biggest sellers in the stock market on Friday.

Uncertainty over the future of Pakistan's government and economy pushed the Pakistani rupee to a record low of about 77.15 against the dollar. OGDC fell 2.9 per cent and Habib Bank dropped 5 per cent. MCB Bank, which posted a 7.7 per cent fall in second-quarter net profit on Friday, slipped 3.7 per cent.

Pakistan's stock market, which rose for six straight years to 2007 and was the top performer in Asia during that period, has tumbled almost 30 per cent this year. It was the third worst-performing market in Asia as of Thursday's close, behind China and Vietnam.

Investors had hoped President Pervez Musharraf's resignation on Monday would bring about a quick resolution to outstanding political issues.

But that is unlikely after the coalition on Friday pushed back a deadline for the restoration of judges deposed by Musharraf last year, further delaying the resolution of a problem that threatens to split the alliance.