It was a week of attrition at the stock market as the country’s political situation took center-stage and shook investor confidence, resulting in the benchmark KSE-100 index falling by 933 points (3.1%) to close at 29,380 points.
Investors’ worst fears were realised after the government failed to make any headway with Pakistan Tehreek-e-Insaf (PTI) regarding the issue of electoral reforms, prompting PTI Chairman Imran Khan to go ahead with his planned march in the capital on August 14.
Tensions escalated throughout the week as it appeared that the PML-N government was in panic mode and taking unprecedented measures to prevent the march. Things came to a head when the PTI leadership announced that they would no longer negotiate and called for early elections to replace the government elected last year.
The development shook investor confidence and the index’s honeymoon above the 30,000-point barrier proved to be shortlived. It plummeted by more than 850 points at one stage on Monday to end the day lower by 666 points, the worst closing since December 2007 after former prime minister Benazir Bhutto was assassinated.
The index remained range-bound throughout the rest of the week as investors adopted caution and volumes plummeted. By the end of the week, the index had fallen by a further 267 points to close at 29,380 points on Thursday.
Index heavyweight sectors like oil and gas, banking and cements were worst hit and bore the brunt of the market’s decline. The oil and gas sector in particular was down 3.4% as a whole despite strong results from the Oil and Gas Development Company (OGDC) and the discovery of a gas field by Pakistan Petroleum Limited (PPL) in the Gambat block.
Similarly, the banking sector also posted strong results, primarily due to the shift in investments to higher yielding PIBs. However, despite the strong earnings performance by United Bank, Allied Bank and Meezan Bank, the sector was down 2.8% during the week.
The cement sector also continued to reel from last week’s announcement of the sell-off of Lafarge Cement to Bestway Cement and fell 4.2%. Despite expectations of strong earnings from the sector, investors are unconvinced that the pricing agreement between the major players will hold, especially after Cherat Cement also announced plans to expand its production capacity during the week.
Foreign buying was the only silver lining of the week as foreigners jumped at the opportunity to buy shares at lower prices, purchasing a net of $22 million worth of equity during the week, slightly lower than the $25 million buying in the previous week.
Average daily volumes fell 25% and stood at 129.4 million shares per day while average daily values were down 29% at Rs6.38 billion trader per day. The KSE’s market capitalisation stood at Rs6.90 trillion at the end of the week.
Winners of the week
Hum Network Limited
Hum Network Limited operates satellite television channels. The company operates a channel targeted primarily at women, one about food, and one that covers lifestyle and entertainment.
EFU Life Assurance
EFU General Insurance Limited is an insurance provider. The Group supplies a number of lines of coverage, including fire, marine, aviation, transport, motor and miscellaneous.
Askari Commercial Bank Limited provides commercial banking services. The bank has branches in Pakistan, Azad Jammu, Kashmir and Bahrain.
Losers of the week
TRG Pakistan operates as an information technology company. The company provides business support and software services to companies. TRG Pakistan manages call centres and offices located in Pakistan and elsewhere throughout the world.
Cherat Cement Company Limited manufactures and sells cement and clinker.
International General Insurance Co of Pakistan Limited provides property and casualty insurance products and services. The company’s products include fire, marine, and motor insurance.
Published in The Express Tribune, August 10th, 2014.
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