ISLAMABAD: The Pakistan Stock Exchange (PSX) bounced back strongly on Friday as investor confidence returned amid calls from the United States (US) and the United Nations (UN) for de-escalation of India-Pakistan tensions over Kashmir, traders and analysts said, as the market gained more than 2,500 points during the intraday trade.
Relations between the neighbors have plummeted after India accused Pakistan of backing an attack in Kashmir that killed 26 tourists on April 22. Islamabad denies the accusation.
The benchmark KSE-100 index gained 2,628 points, or 2.36 percent, to reach 113,954 points around noon on Friday, compared to the previous day’s close of 111,326 points.
Stock analysts attributed the bullish sentiment to calls from the UN, US and other countries to de-escalate tensions between the two countries and offers to mediate the crisis.
“Stocks showed sharp recovery after the US and the UN urged Pakistan and India to defuse tensions,” Ahsan Mehanti, CEO of Arif Habib Group, told Arab News.
“Reports of 0.3 percent year-on-year Consumer Price Index (CPI) inflation for April 25 likely to further ease SBP policy and expected receipt of IMF tranche [of $1 billion] this month played catalyst role in record bullish activity at PSX.”
Pakistan is currently navigating an economic recovery program under a $7 billion International Monetary Fund (IMF) program.
But tensions with India over Kashmir saw the Pakistani stock market shedding over 3,500 points on Wednesday. The US State Department said it was in contact with the India and Pakistan, while State Secretary Marco Rubio on Wednesday held telephonic conversations with Prime Minister Shehbaz Sharif and Indian Foreign Minister Subrahmanyam Jaishankar in a bid to ease tensions.
The UN has urged the arch-rivals to talk, while China, which shares its border with both India and Pakistan, this week repeated its call on both sides to “exercise restraint.” Saudi Arabia has said Riyadh was trying to “prevent an escalation,” while Iran has offered to mediate the crisis.
“The developments over the weekend are likely to be closely watched and will dictate whether today’s bounce spills over into next week also,” Raza Jafri, head of research at Intermarket Securities, told Arab News.
 

MUZAFFARABAD: Neelum Valley in northern Pakistan attracts some 300,000 tourists each summer who marvel at its natural beauty. But the threat of war with nearby India has emptied its hotels.
Gunmen last week killed 26 people in the Indian-administered Kashmir’s resort town of Pahalgam, fueling tensions between the nuclear-armed nations after India blamed Pakistan for the attack, a charge Pakistan denies.
Neelum Valley is less than 3 kilometers (1.8 miles) from the Line of Control, the de facto border that divides the disputed region of Kashmir, making it vulnerable to any military activity.
Hotel owner Rafaqat Hussain said Thursday the crisis has hit the tourism industry hard.
“Most tourists have left and returned to their cities because there is a risk of war,” he said.
Authorities in the Indian-controlled part of Kashmir temporarily shuttered dozens of tourist resorts following the attack as a precaution.
No such order has come from Pakistani authorities. Bazaars in the Pakistani border town of Chakothi were open for business, although people were concerned.
“First of all, our prayer is for peace, as war always affects civilians first,” shop owner Bashir Mughal told The Associated Press, saying he would fight alongside the army in the event of conflict.
Pakistan used to help residents build bunkers near their homes during periods of intense cross-border firing. But the population has grown and some homes lack shelters.
“Local casualties could be devastating if war breaks out,” Mughal warned.
Saiqa Naseer, also from Chakothi, shuddered at the childhood memories of frequent firing across the border.
“Now, as a mother, I find myself facing the same fears,” she said.
She remembered Indian shells striking the picturesque valley when the two countries came close to war in 2019. She has a bunker at her home.
“If war comes, we will stay here. We won’t run away,” she said.