Panic selling triggers PSX trading halt

KARACHI:

Heavy selling marked trading at the Pakistan Stock Exchange (PSX) on Monday as the benchmark KSE-100 index plunged over 11,000 points, triggering panic among investors across the board.

In the morning, the market opened with a steep decline of 7,322 points, or 6.21%, setting the tone for a highly volatile session amid growing geopolitical tensions and a sharp surge in global oil prices that fuelled risk-off sentiment among investors.

According to market data released at 12:44 pm, the KSE-100 was standing at 146,620.56, a loss of 10,995 points, or 6.98%, compared with the previous session's close.

In response to the steep fall, the PSX issued a market halt notice, stating that trading suspension had been activated after the KSE-30 index dropped 5% from its previous close. As per PSX regulations, trading was temporarily halted and all outstanding orders in the system were automatically cancelled. The exchange informed participants that trading would resume according to the prescribed reopening schedule.

The market experienced significant volatility during the day, hitting the intra-day high at 150,174 and the low at 144,119. The KSE-100 index closed at 146,480, down 11,016 points, or 6.99%.

KTrade Securities equity trader Ahmed Sheraz told The Express Tribune that the unprecedented surge in oil prices from around $83 to nearly $119 per barrel weighed heavily on investor sentiment. Besides, hopes for a potential de-escalation in the Middle East conflict failed to materialise as hostilities intensified, further exacerbated by strikes on oil tankers in the region.

"For Pakistan, persistently high oil prices could have significant economic repercussions, like the current account deficit, pressure on the rupee, elevated inflation and the risk of slower growth," he said.

The possibility of a policy rate hike added to worries as the Monetary Policy Committee was set to announce its decision later in the day. Amid the uncertain backdrop, investor anxiety triggered broad-based selling across the market, leading to a trading halt, Sheraz added.

JS Global analyst Mubashir Anis Naviwala commented that the stock market started the week on a bearish note where the KSE-100 plunged more than 13k points in early trading, reflecting intense panic selling. Following the steep drop, a market halt was triggered, suspending trading across the equity market.

Escalating geopolitical tensions and a sharp surge in global oil prices weighed on investor sentiment. Commercial bank, fertiliser and cement stocks were the major contributors to the decline. Investment banking, power and technology sectors also remained under pressure, he said.

It was yet "another bloody Monday" which saw Asian markets trade sharply lower following the overnight 25% rise in oil prices, Arif Habib Limited (AHL) observed in its report.

Pakistan's bourse fell 6.99% to 146k where 97 shares fell and just one rose. Fauji Fertiliser (-9.74%), UBL (-10%) and Engro Holdings (-7.47%) contributed the most to the index's decline, it said.

Globally, oil prices were around 10% off Asia highs following news that G7 countries were considering jointly releasing oil from reserves. In another significant development, Pakistan asked Saudi Arabia to extend the term of its $5 billion loan to 10 years and enhance oil financing to $5 billion. Also, PTCL declared that its unit Pak Telecom Mobile may participate in the spectrum auction scheduled for March 10.

Internationally, it appears "we are approaching a 'peak fear' moment for markets and some positive news regarding the ME conflict can result in markets aggressively re-pricing higher," AHL said.

The KSE-100 is currently trading 6.4% below its 200-day moving average – a reading that was last seen in 2023. With the index down 25% from its January peak, these remain compelling levels for longer term positions, it noted.

Topline Securities wrote that the KSE-100 index closed Monday's session with a decline of 11,016 points. "This marks the second-largest single-day drop in the index's history, following the record fall of 16,089 points witnessed earlier."

It mentioned that trading was temporarily suspended after the KSE-30 index declined more than 5% from the previous day's close, triggering a market-wide circuit breaker. Market sentiment remained fragile as global crude oil prices surged above $110 per barrel after Iran moved to close the Strait of Hormuz, a key route for global energy shipments. It triggered strong reactions across international energy and financial markets and weighed on investor confidence.

Index-heavy constituents including Fauji Fertiliser, United Bank Ltd, Engro Holdings, Hub Power and Lucky Cement emerged as major laggards, collectively dragging the index down by 4,497 points.

Overall trading volumes increased to 621.7 million shares against Friday's tally of 363.1 million. The value of traded shares stood at Rs37.1 billion.

Shares of 480 companies were traded. Of these, 33 closed higher, 386 fell and 61 remained unchanged. K-Electric led the volumes chart with trading in 127.5 million shares, losing Rs0.61 to close at Rs7.20. Foreign investors sold shares worth Rs717.6 million, the National Clearing Company reported.