Market watch: KSE-100 index loses 158 points following MSCI review

Benchmark index decreases 0.38% to settle at 40,994.05

KARACHI: The stock market recorded a modest fall on Wednesday primarily due to the MSCI semi-annual index review, which downgraded two Pakistani companies and removed two more. The KSE-100 index ended the day just a few points below the 41,000 mark.

In line with market expectations, the MSCI relocated two leading Pakistani stocks - Lucky Cement and United Bank Limited (UBL) - to its small-cap index from the mid-cap index with effect from December 1, 2018.

However, it unexpectedly removed Honda Atlas Cars and Maple Leaf Cement from the MSCI Global Small-Cap Index, according to the Geneva-based firm's November 2018 semi-annual equity indices review results announced in early hours (according to Pakistan time) of Wednesday.

Reacting to the development, the KSE-100 index initially dropped 388 points as investors offloaded stocks. However, soon after the index staged a decent recovery climbing into the green zone.

The downward pressure was led by sliding crude oil prices in the international market, which took a heavy toll on exploration and production (E&P) stocks. The sector dragged the index down by 227 points with Pakistan Petroleum, Pakistan Oilfields and Oil and Gas Development Company closing in the red zone.



The cement sector displayed a brilliant performance and remained positive despite the unexpected removal of Maple Leaf Cement from the MSCI Global Small-Cap Index.

At the end of trading, the benchmark KSE 100-share Index recorded a decrease of 158.23 points or 0.38% to settle at 40,994.05.

Elixir Securities' analyst Murtaza Jafar said the index fell 158 points to below 41,000 as energy stocks traded deep in the red because of a sharp fall in international crude oil prices.

"Pakistan Oilfields Limited (-5%), Pakistan Petroleum (-3.54%) and Oil and Gas Development Company (-3.04%) traded negative throughout the day," he said. "In the MSCI Semi-Annual Index Review, United Bank (-4.24%) and Lucky Cement (+2.92%) were downgraded from the MSCI Emerging Markets Index to the Small-Cap Index while Maple Leaf Cement (+2.89%) and Honda Atlas Cars (-2.96%) were removed from the Small-Cap Index."

Pakistan's weight in the MSCI Emerging Markets index is expected to drop to 4bps from 6bps earlier.



"We expect declining international oil prices to provide much-needed relief to the external account where, according to Elixir Research estimates, oil imports will go down by $0.8 billion for every $5-per-barrel decline in crude prices," the analyst added.

Overall, trading volumes increased to 255.17 million shares compared with Tuesday's tally of 177.17 million. The value of shares traded during the day was Rs13.23 billion.

Shares of 378 companies were traded. At the end of the day, 218 stocks closed higher, 141 declined and 19 remained unchanged.

Siddiqsons Tin Plate was the volume leader with 25.2 million shares, gaining Rs0.83 to close at Rs19.82. It was followed by Lotte Chemical with 24.3 million shares, gaining Rs0.4 to close at Rs19.5 and TRG Pakistan with 17.3 million shares, losing Rs1.55 to close at Rs30.4.

Foreign institutional investors were net sellers of Rs1.1 billion worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.