Market watch: Ukraine crisis batters KSE-100 index

Benchmark KSE-100 drops gains 1,302.41 points to settle at 43,830.51

KARACHI:

The Pakistan Stock Exchange felt the heat of the geopolitical tensions on Thursday and the KSE-100 index dived over 1,300 points, fuelled by Russia’s attack on Ukraine.

Ukraine Foreign Minister Dmytro Kuleba confirmed in a tweet that Russia had launched a full-scale invasion of Ukraine and Kremlin was targeting cities with weapon strikes. The development led to a plunge in global equities and the ripple effect was experienced by the local stock market as well.

Moreover, the surge in the global oil prices to $102 per barrel also shattered investor sentiments and pointed towards further worsening of the current account deficit. Oil imports make up a major chunk of total import bill of Pakistan hence the uptrend sparked panic among market participants.

The bloodbath hit all sectors of the bourse and they ended the day with mammoth losses.

The KSE-100 index nosedived as soon as trading began as investors adopted a dump-and-run approach. The bearish sentiments remained evident throughout the day and the market continued its rout. The selloff accelerated in the final hours and inflated the losses.

At close, the benchmark KSE-100 index recorded a fall of 1,302.41 points, or 2.89%, to settle at 43,830.51 points.

Speaking to The Express Tribune, Arif Habib Commodities CEO and Managing Director Ahsan Mehanti said that the plunge in stock market was witnessed primarily on the back of Ukraine crisis.

“The recent attack triggered a selloff in global equities and the spillover effects are being witnessed at the local bourse as well,” he said. “Global markets are in turmoil and there is widespread uncertainty.”

Speaking about the impact of surge in oil price past $100 barrier, he said that the economy would bear the brunt of the development for some time.

Pakistan’s oil import bill for the first six months (July-December) of fiscal year 2021-22 stood at $10 billion and the government was aiming to maintain it at that level for the next six months (January-June) however with the recent climb in oil prices, this seems impossible, he said.

He voiced fear of sharp increase in the country’s imports over the next few months.

Pak-Kuwait Investment Company Head of Research Samiullah Tariq highlighted that the stock market nosedived owing geopolitical tensions.

The market panicked due to anticipation of further ascent in the inflation reading and hike in commodity prices.

Moreover, price hikes in the international markets would impact Pakistan’s trade balance adversely, he said.

Lakson Invesments Chief Investment Officer Mustafa Pasha noted that the KSE-100 index was reflecting the decline in the international markets, stemming from the geopolitical situation.

“Investors are concerned about rising oil prices, their inflationary impact and deterioration of the current account,” he said. “The market is reacting rationally and cyclical sectors are witnessing massive selloff.”

Overall trading volumes soared to 350.1 million shares compared with Wednesday’s tally of 186.4 million. The value of shares traded during the day was Rs6.8 billion.

Shares of 377 companies were traded. At the end of the day, 36 stocks closed higher, 317 declined and 24 remained unchanged.

Flying Cement (R) was the volume leader with 38.4 million shares, gaining Rs0.36 to close at Rs1.19. It was followed by WorldCall Telecom with 33.1 million shares, losing Rs0.14 to close at Rs1.68 and Hum Network with 20.5 million shares, losing Rs0.62 to close at Rs6.66.