US distrust triggers Pakistan stocks sell-off

July 31st, 2008 - 7:40 pm ICT by IANS  

Karachi, July 31 (DPA) Foreign investors and local institutions dumped Pakistani stocks Thursday, prompted by strong US statements against the country’s top intelligence agency for its alleged support to Islamic militants, traders said. The benchmark KSE-100 Index of the Karachi Stock Exchange dropped by around 2.5 percent or 269 points to close at 10,583, as nervous foreign investors sold portfolios worth more than $8.7 million and domestic institutions also adopted a cautious approach.

“There has been a series of bad news about US-Pakistan relations in terms of the war against terrorism and Pakistan’s role in controlling militancy,” said Ateeq Ahmed, a trader at Capital One Equities.

A report in Wednesday’s edition of The New York Times cited new CIA assessments indicating clear links between officials of Pakistan’s Inter-Services Intelligence (ISI) and the Afghan militants tied to Al Qaeda.

Though the Pakistan Army strongly denied the charges, another report in a local daily, The News, quoted Defence Minister Ahmad Mukhtar as saying that US President George W. Bush expressed annoyance at the ISI when he met Pakistani Prime Minister Yousaf Raza Gilani in Washington.

“President Bush expressed concern that certain elements in the ISI were leaking information to the terrorists before they could be hit by the US or Pakistani forces. This is a cause of concern for the US side,” Mukhtar was quoted as saying.

Traders said such reports only built up the already tense atmosphere on the investment horizon in the country. Afghanistan’s President Hamid Karzai last month also lashed out at the ISI for supporting incursions into his country.

Karzai also warned against possible attacks inside Pakistan to hit militant strongholds in the restive north-western tribal region.

Meanwhile, Pakistani stocks were also down because of changes in profit margins of oil companies as the government capped their profits at around $100 dollars a barrel with anything above threshold to go to the government, traders said.

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