Global bloodbath: PSX suffers historic decline as markets crash amid US-China tariff war

The Pakistan Stock Exchange (PSX) Monday experienced a meltdown as the benchmark KSE-100 Index fell by a staggering 6,287.22 points, representing a decline of 5.29 percent; whereas the ALLSHR index lost 3700.05 points to now sit at 70,171.43.

The carnage was followed by trading activities being suspended for 30 minutes, giving time to both regulators and investors to assess the situation.

While Pakistan’s KSE-100 tracks the performance of the 100 largest and most liquid companies, the ALLSHR index records the performance of all publicly listed companies on the PSX. However, the bloodbath was not limited to the PSX as capital markets across the globe reel from the effects of the trade war between the United States (US) and China.

According to reports, China has retorted to the US by slapping substantial tariffs of its own through “retaliatory levies” on all goods imported from the US. This levy has been accompanied with China restricting its exports on seven rare elements.

The trade war has left many investors to believe that a recession is on the horizon, prompting massive sell-offs in international capital markets. Despite being the one to issue the retaliatory tariffs, China’s own capital markets have witnessed large selloffs, causing the Shanghai Stock Exchange Composite Index to fall by 7.34 percent. 

The effects have reached US shores too as the New York Stock Exchange (NYSE) composite has recorded a sharp decline of 6.12 percent after falling by an alarming 1,148.58 points in 24 hours and currently sits at 17,618.61 points.

The National Association of Securities Dealers Automated Quotations (NASDAQ) has plummeted by a whopping 5.82 percent as it fell by 962.82 points during trading hours to settle at 15,587.79. For reference, the NASDAQ is the second largest US based stock exchange by market capitalisation -- second only to NYSE.

The Saudi stock market hasn’t fared well either, as the imposition of tariffs coupled with falling oil prices have wiped out large sums of investments causing a loss of 500 billion riyals. As of publishing, the Saudi benchmark index, Tadawul All-Share Index (TASI) has declined by 3.05 percent after falling by 337.72 percent. As per reports, this has caused a loss of $90.5 billion to Saudi Aramco alone. Notable companies such as the Saudi National Bank have also recorded substantial losses.