PSX fails to sustain gains
Share prices are offering good returns but several risk attached to them which might dilute earnings
KARACHI (Dunya News) – Share price dropped and failed to sustain rally heralded on Tuesday prompting financial institutions and other entities to park their funds in the government back securities which recorded an increase of average 2.5 percent reaching to six year high level.
The trading commenced on bullish note and during the session it comfortably sailed up to 38449 points as several allocated fresh funds in the equity market. However, following the announcement from the Directorate of National Savings, spiking the rate on government backed securities in range of 1.50 percent to 2.50 percent which was almost six years high turned the tables.
Analysts were of the view as the local stock market under hot waters since last year and number of issues pushing the stock values, it has been better to park funds in government guarantee instruments. Share prices are offering good returns but several risk attached to them which might dilute the earnings, said an analyst.
Decline in the index was mostly attributed to slippage in share price of oil marketing companies. PSO was down by Rs2.03, Hascol down by Rs4.70 and Shell by Rs14.11. The main reason behind this fall was the disappointing sales numbers for the first half of the current fiscal year. Oil sales during July to December 2018 were down by 21 percent to 20.4 million tons.
Adil Ghaffar, CEO of First Equity Modaraba said that International Court imposed a hefty fine of over US$ 4b in Reko Diq case and in case of non-payment, PIA will be debarred from landing in 60 countries of the world.
This vandalism will open up a new Pandora box and all political governments, since 1993 will be taken to task. The fine of US$ 4 billion, along with other fines of US$ 1b each in Turkish Power and IPPs cases and its severe consequences will be a tough call for the present regime.
“This will neutralize the impact of financial assistance received from friendly countries and once again multilateral agencies will be in vanguard position”, he said.
Details by Harris Zamir
