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Terrorism in US

Karachi Stock Exchange the biggest of the three bourses lost Rs 24 billion since Wednesday September 12.

Sep 24 - 30, 2001

The kamikaze terrorist attacks on the World Trade Centre and Pentagon, the symbol of US economic might dreaded intelligence respectively, smashed more than the buildings they hit. They sent the US economy in a spin the effects of which were felt the worldover, including Pakistan which overnight turned into a frontline state against the anti-terrorism war declared by a grieving and an angry United States.

For the first time in the history of the US, the New York Stock Exchange remained closed for a whole week since that ignominious Tuesday, September 11. The mighty dollar witnessed wide fluctuations internationally, the world oil and gold prices rose sharply. The loss of four commercial airliners two Boeing 757 and two Boeing 767, one each of United Airlines and American Airlines two of which were smashed by the terrorist-pilots into the World Trade Centre and another which smashed into the Pentagon sent the scrips of the airlines when the NYSE opened for trading on September 17. With over 800 confirmed dead in the Pentagon and another 240 confirmed dead and 6,333 missing at the World Trade Centre carnage, the US insurance industry faced a similar dilemma. The situation forced the US government to announce a $ 16 billion bailout package for the US aviation industry.

The US President George W. Bush declared war on terrorism calling it the first war of the millennium. He was backed by an unanimous approval by the US legislature to allow him to use whatever resources he would like putting $ 40 billion, twice the funds he asked for, at his disposal to fight the 'long war' to root out terrorism wherever it existed in the world.

The fallout of the terrorists attacks in the US has also taken a heavy toll on the developing economy of Pakistan. Karachi Stock Exchange the biggest of the three bourses lost Rs 24 billion since Wednesday September 12. The three stock exchanges of the country Karachi, Lahore and Islamabad reeled from unusual lows in the scrips of all the known and less known scrips. KSE 100 Index, one of the major indicator of trading, slid by 107.16 points and the total value of shares decreased by Rs 24 billion. Local as well as foreign investors and financial institutions resorted to heavy selling to offload the shares in the wake of the terrorist attacks in the US and the imminent attacks by the US on the Afghanistan, for sheltering Osama Bin Laden, the mastermind behind the attacks.

The stocks in the US fell sharply the day after the horrific attacks: Dow Jones Industrial average tumbled by 420.08 points or 4.72 per cent to 8,483.32, while the Nasdaq Composite sank by 102.59 points or 6.6 per cent to 1,452.49. The ripples of this, like the rest of the world were also felt in Pakistan as the KSE 100 Index which started with 1246 points at the beginning of the week dropped by 9.75 per cent to close at 1,139.4 points (each Index point equals about Rs 230 million) to dip below the psychological barrier of 1,200 points on Wednesday September 12.

The value of shares traded at the KSE dropped from Rs 314.140 billion to Rs 290.188 billion as value of all the major scrips dipped: Hub Power shares dropped by Rs 1.75 to Rs 14.15 (102.3 million shares traded); PTCL dropped by Rs 1.80 to Rs 13.80 (97.8 million shares traded); PSO by Rs 10.15 to Rs 118.45 (47.8 million shares traded).

The situation forced the officials of the three stock exchanges to unanimously keep the bourses closed for three days on September 17-19. They, however, remained closed for the whole week and were expected to reopen on Monday September 24. Many fear that the three stock exchanges that would not open on Monday as announced by the officials.

The uncertainty about the timing of the US attack in the face of the defiance on the part of the ruling Taliban in Afghanistan has brought financial, industrial and trading activities to a new low across the country. While dollar fluctuated widely internationally, its trading in the open market here in Pakistan remained more or less stable due primarily as its buying and selling takes place on a much small scale relatively in the country. However, gold prices in Pakistan registered a record increase on Friday September 14 as international prices touched $287.50 an ounce compared to $ 272 an ounce on September 11. Gold prices at Karachi bullion market increased by Rs 175 per 10 gram to Rs 6125. In case of US attacks on Afghanistan, observers fear, international gold prices would touch $ 300 level.


According to international electronic media Pakistan has asked the US to return the favour for its 'unstinted support' against US campaign against terrorism. They include the solving of the Kashmir issue with India and the writing off heavy foreign loans burdening its economy. Pakistani government which is facing immense internal pressure against allowing the US to use it as a base against Afghanistan should at least get some incentives to cool its people. The response from the US is encouraging as the Secretary of the State Colin Powell has said that 'Pakistan would be fairly rewarded for its support to the US.'