Rising political tension took its toll on the stock market as the benchmark KSE-100 index fell 463 points (1.6%) after witnessing its worst ever single-day performance – in terms of points – during the week ended August 15.
With no signs of a rapprochement between the ruling Pakistan Muslim League Nawaz (PML-N) and the opposition Pakistan Tehreek-e-Insaf (PTI), the week started off in panic mode as the KSE-100 index fell 1,310 points (4.5%).
The sell-off was broad-based with the majority of shares on the index closing at their lower lock (down 5%). The index closed at 28,071 points on Monday with investors fearing that the worst was yet to come as the PTI was expected to launch its “Azadi March” towards the capital on August 14, in a bid to remove Nawaz Sharif as prime minister.
However, things took a turn for the better as the government announced that the PM would address the nation on Tuesday followed by the PTI’s announcement that it intended to hold a peaceful protest and had no plans to derail the democratic process in the country.
Investors reacted positively to these developments and the index made steady gains in the following three sessions of the week (Thursday being a holiday due to Independence Day) to recover 846 points by Friday and closing the week at 28,917 points, down by 1.6% over the previous week.
Almost all sectors at the bourse bore the brunt of the losses and were unable to recoup them by the end of the week. Impressive earnings announcements by the banking, oil and gas and fertiliser sectors could do little to prevent a sell-off. The oil marketing and cement sectors were particularly hard-hit due to developments in these sectors.
Attock Petroleum Limited (APL) and Shell Pakistan both reported earnings which were lower than expectations after incorporating inventory losses into their books. APL ended the week lower by 2% while Shell dropped 3.6%.
The cement sector also suffered a torrid week as sales figures for the month of July were disappointing. Sales fell 34% on a year-on-year basis, largely due to Ramazan, when construction activity typically slows down significantly. The entire sector was down 2.6% over the previous week.
The political scenario also had an impact on foreigners’ behaviour as they turned into net sellers. Foreigners offloaded a net of $0.2 million during the week, as compared to the healthy net buying of $22 million in the previous week.
Volatility at the bourse resulted in an increase in trading activity as average daily volumes rose 30.3% and stood at 168 million shares traded per day. Similarly, average daily values were also up 27.1% and stood at Rs8.11 billion per day. The KSE’s market capitalisation stood at Rs6.79 trillion at the end of the week.
Winners of the week
Jubilee General Insurance Company
Jubilee General Insurance Company Limited is an insurance provider. The group supplies a number of lines of coverage, including health, fire, marine and miscellaneous.
International Industries Limited manufactures cold rolled steel strips, steel tubes and galvanised piping products.
EFU General Insurance
EFU General Insurance Limited is an insurance provider. The group supplies a number of lines of coverage, including fire, marine, and aviation, transport, motor and miscellaneous.
Losers of the week
Javedan Corporation Limited manufactures portland cement, blast furnace slag cement and sulphate resisting cement.
Agritech Limited produces fertiliser in Pakistan. The company offers urea and single super phosphate fertiliser as well as is also involved in importing and selling of DAP.
TRG Pakistan operates as an information technology company. The company provides business support and software services to companies. TRG Pakistan manages call centers and offices located in Pakistan and elsewhere throughout the world.
Published in The Express Tribune, August 17th, 2014.
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