Political turmoil sends PSX plunging 2%

KSE-100 index loses 1,147.10 points, settles at 59,872.96

KARACHI:

The Pakistan Stock Exchange (PSX) plummeted nearly 2% to above 59,000 points on Friday amid intense political turmoil following the emergence of a new version of the story about former Premier Imran Khan’s ouster by a no-confidence motion in April 2022. The index traded predominantly in the red as mainstream political players failed to reach a coalition arrangement necessary to form a new government, discouraging investors.

In the morning, the trading session began sluggishly as persistent political uncertainty weighed heavily on investor sentiment, pushing the index down by over 1,000 points by mid-day. Weak export data reported by the Pakistan Bureau of Statistics further dampened market spirits, leading to an intra-day low at 59,739.47 points. The market continued its sharp decline, closing with a loss of more than 1,100 points.

“Stocks sharply declined amidst dismal data showing negative LSM growth at -0.39% for July-Dec ‘23 and reports of Pakistan being downgraded to an authoritarian regime by the Economist Intelligence Unit (EIU),” said Arif Habib Corp MD Ahsan Mehanti. “Uncertainty over the power-sharing formula by major political parties, IMF’s new conditions over the next $1.2 billion tranche under SBA to liberalise imports, and the cabinet’s approvals for an increase in gas prices acted as catalysts for the bearish market close.”

At the close, the benchmark KSE-100 index recorded a loss of 1,147.10 points, or 1.88%, settling at 59,872.96. Topline Securities noted in its report that Pakistan equities began the day negatively, continuing the momentum from the previous day. The bourse remained negative for most of the business hours, with the KSE-100 index hitting an intraday low at 59,740 level (down 1,281 points) and ultimately closing at the 59,873 level (losing 1,147 points; down 1.88%).

“Today’s pessimism stems from continuous uncertainty over the political front regarding the formation of the upcoming coalition setup, as political parties have yet to reach a conclusion in this regard,” Topline added. The Exploration & Production, Power, Tech, and Cement sectors contributed negatively to the index, with Oil and Gas Development Company, Hub Power, Pakistan Petroleum, Systems Limited, Mari Petroleum, and Lucky Cement collectively losing 465 points, according to the report.

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Arif Habib Limited (AHL) observed in its report that stocks witnessed a close below 60k with a -5.14% week-on-week (WoW) decline, nearing the 59k February target set at the end of January, as the market entered a seasonally weak period. Only 13 stocks rose on Friday while 74 fell, with Oil and Gas Development Company (-5.47%), Hub Power (-2.65%), and Pakistan Petroleum (-4.12%) being the biggest drags on the index. Conversely, Engro Fertiliser (+2.12%) and Fatima Fertiliser (+7.36%) were the biggest index gainers, AHL wrote.

In significant developments, the federal cabinet approved a +12.3% increase in the weighted average gas price to Rs1,533/mmbtu. The gas tariff revision aligns with the IMF’s conditions for the upcoming second review of the Standby Arrangement, the report added. JS Global analyst Mohammed Waqar Iqbal noted that the market remained negative, with the KSE100 index losing 1,147 points to close at 59,873. “We recommend investors take advantage of any downside as an opportunity to buy in the Banking and Exploration & Production sectors,” the analyst added.

Overall trading volumes increased to 314.2 million shares against Thursday’s tally of 345.1 million. The value of shares traded during the day was Rs12.3 billion. Shares of 331 companies were traded, with 77 stocks closing higher, 238 dropping, and 16 remaining unchanged.

K-Electric led in volume with trading in 41.8 million shares, losing Rs0.23 to close at Rs4.10. It was followed by WorldCall Telecom Limited with 25.7 million shares, losing Rs0.04 to close at Rs1.21, and Oil & Gas Development Company with 20.6 million shares, losing Rs6.18 to close at Rs107.93.

Foreign investors were net buyers of shares worth Rs636.14 million, according to NCPL.

Published in The Express Tribune, February 17^th, 2024.

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