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Reasons behind why stock market collapse in Pakistan

Check the reason behind why day by day Pakistan Stock exchange collapse. There are many reason behind the major is increase in currency fluctuation. Dollar take high jump in Pakistan that the one of the reason. Analysts at Arif Habib Limited said that the PSX witnessed a bloodbath on Friday June 24, 2022 when the Prime Minister announced a 10 percent tax on large industries to allocate revenue to support the country’s poor as inflation rises support. The benchmark index KSE-100 stumbled to 2161 points. Volumes remained healthy while selling pressure was seen across the board.


This article provides an overview of the main indicators of Pakistan stock market development and their possible relevance for real economic activity with a focus on the post-liberalization period. Aspects of the market examined include market liberalization, market integration into global markets, microstructure issues of trading and settlement mechanisms, and corporate governance issues. A comparison with selected emerging and developed markets shows that the Pakistani equity market is small and a relatively insignificant source of capital mobilization. These factors limit the stock market’s role in stimulating economic activity. Also, the market seems overly volatile due to noise traders and speculators. On a positive note, the market appears to be bringing investors huge gains that are offsetting the higher market volatility. Also, the relative segmentation of the market makes it a potential place for international diversification.

The stock market is at fault lines that no one has really been able to break through in recent decades.

The best-performing market in Asia in 2016, which delivered stellar returns of 46 percent, has continued to falter after its benchmark hit an all-time high of 53,124 on May 25, 2017.

In the following two and a half years, investors lost 40-50 percent of their savings. Several attempts to help the market recover have proved unsuccessful. The latest such effort, which saw the market gain 19.8 percent in about five months (July 1 to December 6), was hailed by investors as the highest return for any exchange in the region. It raised hopes that the Pakistan Stock Exchange Today may have bottomed.

However, the market is back on the slippery slope and most pundits have a bleak outlook for the near future. Although market commentators are quick to switch from blaming the economy to political issues for the market crisis, there are some fundamental flaws in the PSX that regulators have been unable or unwilling to correct.

The long-term problem is the lack of market depth. The number of publicly traded companies is small and as a result too many investors chase too few stocks that pay consistent dividends.

With thousands of companies applying for registration with the Securities and Exchange Commission of Pakistan (SECP) every month, the total number of registered companies has grown to over 110,000. In contrast, the number of listed companies has dwindled to 558 over the years. More than 100 of these companies are being placed on the delinquent counters, which is a red flag for investors.