Stocks bloodbath as KSE-100 plummets 2,043 points

Moody’s downgrade of outlook, foreign selling and poor economic indicators led to panic selling

KARACHI: The KSE-100 index plunged by a whopping 2,043 points or 4.7% during the outgoing week, as worrying economic indicators and poor outlook report by a credit ratings agency took toll on the benchmark, pushing it near the 41,500 level.

On Tuesday, the first trading day of the week, the index was marred by dull activity and directionless trading, with the KSE-100 finishing on an almost stagnant note. However, things took a turn on Wednesday as heavy selling by foreign investors dragged the benchmark down. Fuelled by poor macroeconomic numbers, the bearish trend continued for the following three sessions, leading the index to once again drop below the 41,700 mark.

The announcement of Moody’s outlook on Pakistan, where the country was downgraded to negative from stable, also dampened investor sentiment. Panic selling led the index to continue the downward spiral, as the alarmingly high current account deficit, low foreign exchange reserves and stagnant foreign direct investment painted a dreary picture of the economy. Fluctuations in the exchange rate, with the rupee losing value against the US dollar, also added to the uncertainty.



As longer trading hours made a comeback, volumes and value traded rose by 29% and 13% week-on-week to 170 million shares and $61.5 million, respectively.

Index-heavy sectors including commercial banks and oil and gas exploration remained under pressure during the week, on account of foreign selling and profit-taking, as the sectors deducted 666 and 356 points, respectively, from the index. Cement, oil and gas marketing and auto stocks also remained under pressure as investors remained concerned on negative implication of currency devaluation on said sectors.

The decline in oil and gas exploration companies was also led by falling international oil prices on expectation of production increase by OPEC in its meeting. After the meeting on Friday, OPEC members agreed to increase output by 1 million bpd. In terms of scrips, HBL and UBL were down 9.6% and 6%, respectively, while LUCK fell 7.7% during the week.



Foreign investors sold shares worth a massive $24.5 million during the week, compared with net selling of $4.4 million last week. The bulk of selling was concentrated in banks ($21.2 million) and cements ($3.82 million). On the domestic front, mutual funds and individuals offloaded shares worth $6 million and $5.6 million, respectively. On the other hand, insurance companies and corporates stood out as net buyers of $15.2 million and $14.6 million.



Among major news of the week were; circular debt soared to Rs547 billion, foreign direct investment slipped to $2.4 billion in 11 months, current account deficit increased to $16 billion and K-Electric received approval to use RLNG.

Winners of the week

Fatima Fertilizer Company



Fatima Fertilizer Company Ltd produces fertilisers. The company is developing a fully integrated fertiliser complex, capable of producing ammonia, nitric acid, nitro phosphate, nitrogen phosphorous potassium, and calcium ammonium nitrate.

Ibrahim Fibres



Ibrahim Fibres Limited, a part of the Ibrahim Group, operates a polyester staple fibre manufacturing plant. The company manufactures a wide range of polyester staple fibre and it also manufactures a variety of blended as well as pure synthetic yarns. Ibrahim Fibres Ltd also owns an in-house power generation plant.

Losers of the week

Pakistan Stock Exchange



The Pakistan Stock Exchange is a self-listed company

Pakistan International Container Terminal



Pakistan International Container Terminal operates a container shipping facility in Karachi. 

Published in The Express Tribune, June 24^th, 2018.

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