Bhutto's death likely to roil Pakistan markets - Polya Lesova

NEW YORK (MarketWatch) -- The assassination of Pakistani opposition leader Benazir Bhutto will likely rattle the country's equity markets, eroding confidence at least in the short term in a market that's been one of the best performers in Asia, observers said.

Bhutto, a former prime minister of Pakistan, was killed Thursday in an attack that also killed at least 20 others at the end of a political rally in Rawalpindi. Read full story.

Bhutto's death will likely also destabilize Pakistan's equity market, among the best-performing bourses in the region.

"In the very short term, there will be a knee-jerk reaction as you saw at the time of the imposition of the rule of emergency by Musharraf earlier this year," said Rupert Neil Bumfrey, an advisor to emerging markets asset-management companies, in a phone interview from Dubai.

"Again, the knee-jerk reaction will be don't go Pakistan," said Bumfrey, who travels often to Pakistan. "However, as we've seen with the stock market since the imposition and abandonment of emergency rule, the stock market has continued to be positive. In the long run, Pakistan remains an excellent investment. It has good value."

In Karachi, the benchmark KSE-100 stock index closed down 0.3% on Thursday. See the Karachi Stock Exchange's Web site.

It has rallied 47% year to date. By comparison, India's Sensex index has gained 46.6% year to date.

Another key indicator showed a similar advance. The MSCI Pakistan index's year-to-date gain has been 40.7%, while MSCI India has surged 70% and MSCI China has rallied 65%.