Pakistan stocks plunge 4.5 percent this week
Traded value during the week went down by 22%, while trading volume showed decline of 31%.
KARACHI (Dunya News) - Pakistan equities lost 4.5 percent in a single week and closed at 41,624 index level, that is highest weekly loss of 2018 amidst depleting foreign reserves and rising political noise ahead of general election 2018.
Topline Securities in its weekly review said that traded value during the week went down by 22 percent, while trading volume showed decline of 31 percent.
The brokerage house said that the lower investors’ participation is due to absence of any positive trigger.
Key events to track going forward will be official announcement of general election date, inflows of foreign currency in Pakistan, and announcement of interim Prime Minister by Leader of Opposition and Prime Minister.
Foreign selling in Commercial banks kept whole sector under pressure during the week and eroded 346 points from the index. Among scrips, Habib Bank lost 4.5 percent, United Bank lost 5 percent and MCB one percent during the week.
Foreigners were net sellers during the week amounting to $20 million versus net selling of $4.1 million last week. On the other hand, amongst local investors mutual funds were net sellers of $16.8 million whereas banks were net buyer of $20.2 million.
An analyst from JS group said that the market remained in shambles for the third consecutive week in a row with benchmark KSE-100 index splashing red on the screen in all trading sessions.
Bears slammed volatile political climate post controversial comments by ex-PM Nawaz Sharif made over the weekend on Mumbai terror attack as it added towards overall uncertainty surrounding the upcoming general elections. Meanwhile, the national assembly passed the Finance bill 2018-19 on Friday.
On the macroeconomic front as well, cracks appeared to widen further with; 1) recent numbers showing continued downward spiral in foreign exchange reserves (State Bank of Pakistan held $10.79 billion as on May 11, 2018, implying import cover of less than 2.5 months) 2) international oil prices hitting US$80/bbl mark; and 3) release of external debt statistics showing an alarmingly high debt to GDP ratio of 64.1 percent by end March 2018.
An analyst from Elixir Securities said that the market is reeling from risk-off sentiment due to adverse political climate and macroeconomic concerns over the External Account where the SBP’s reserves have already fallen to USD10.8bn. However valuations have started to open up, as that the market has already come off 11% from its 2018 highs. We thus expect Value Buying to emerge in case of further declines.
(Details by Haris Zamir)
