Stock market stays in search of direction
The Index opened at 40,251.26 today, and closed at 40,243.26 on Friday.
KARACHI (Dunya News) – The stock market remains in search of positive triggers on Monday as not much progression could be seen at the benchmark KSE-100 Share Index that dropped 142.98 points or 0.36pc as of 11.19am. The Index reached 40,100.28 as potential investors continue to react to the impact of the coronavirus outbreak hurting imports and other factors. The Index opened at 40,251.26 today, and closed at 40,243.26 on Friday.
In the previous week, the market kept struggling for its sustainability when confusion and uncertainty surrounded investors until late Friday when the IMF, in its concluding remarks affirmed that Pakistan had been successful in completing the "structural benchmarks" as well as in meeting "all end-December performance criteria" which had been set for the implementation of $6 billion Extended Fund Facility programme.
Other persisting factors, in particular the FATF concerns and large suspension of imports from China, which had been hammering the stock market. Besides, strife political disagreements between coalition parties in the government until some of them were settled in meetings with the ruling PTI.
Altogether, the Pakistan Stock Exchange’s (PSX) KSE 100-Share Index obtained only 99.63 points on a weekly basis.
Since mid-January, investors have been adopting extremely cautious behaviour after more headlines cover mounting deaths due to coronavirus taking full hold, a plunge in global crude oil prices, unchanged main policy rate by the State Bank of Pakistan at 13.25 percent for the next two months, uncertain FATF’s decision and political uncertainty in the country.
The SBP in the latest monetary policy statement kept the interest rate unaltered and pushed selling in the leveraged sectors such as cement and steel. Concerns over higher than expected reading of inflationary pressures and political uncertainty sparked by coalition partners of the government also kept investors away from the market.
Moreover, the outcome of the FATF in the review happening currently in Paris remained unclear, but analysts opined that Pakistan might escape black list, but remain in grey list for another three or six months. Several reports claimed that the substantial progress was made to pull the country out of the grey list, but Minister for Economic Affairs Hammad Azhar noted it was premature to speculate on any outcome.
They were also spooked by uncertainty over the decision by the Financial Action Task Force (FATF) on Pakistan status to be decided this month and the country’s ability to pull itself out of the grey list. Investors were also rattled over the inflation figures for January which came out at an alarming 12-year high of 14.6pc.
Some traders and businessmen in Pakistan said that loading of goods in China has come to a halt. Most industries that depend on raw materials imported from China usually build stocks to last them through the holiday closure, but in some cases at least those stocks are now running low and businesses are left wondering when normal imports might resume.
Southeast Asian stocks subdued
Most Southeast Asian stock markets were subdued in thin trading on Monday, as stimulus measures from China helped cushion the impact from the coronavirus epidemic on regional economies.
As governments unleash more monetary loosening to protect their economies, China’s central bank lowered one of its key interest rates, paving the way for a cut in its benchmark loan prime rate, which will be announced on Thursday.
The number of reported new virus cases in China’s Hubei province rose on Monday after two days of falls, while across mainland China, the total number of cases rose by 2,048 to 70,548, with 1,770 deaths.
"COVID-19 should remain a major trading theme for the session with investors looking out for the size and scope of stimulus from governments," Prakash Sakpal and Nicholas Mapa, economists at ING, wrote in a note.
Singapore is set to roll out a hefty package of measures to counter the blow from the epidemic at its annual budget on Tuesday, while Malaysia and Thailand have also pledged to implement measures to support their economies.
Singaporean stocks were flat, as the impact of a weakened 2020 growth outlook was softened by data which showed that its exports rose 4.6% in January on a month-on-month basis, versus analysts’ forecasts for a contraction.
The city-state has cut its growth and exports forecasts for this year and flagged the possibility of recession in 2020, due to an expected hit from the virus outbreak.
Singapore has reported 75 cases of infections to date, one of the highest tallies outside China.
The Philippine index was boosted by gains in big cap conglomerates such as Ayala Land and SM Investments Thailand rose on communication services, with Advanced Info Service Pcl adding up to 3.4%.
Thailand’s trade-dependent economy grew at its slowest pace in five years in the fourth quarter of 2019, and less than expected, as exports declined and public spending slumped.
Shares in Indonesia Malaysia were little changed.
Middle East stocks slip
Most major Gulf stock markets fell in early trade on Sunday, with Saudi Arabia pulled lower by losses in Saudi Aramco and banking shares, while Abu Dhabi was up in response to positive corporate earnings.
Saudi Arabia’s benchmark index inched down 0.2%, led by a 0.8% fall in Saudi Aramco. The stock was trading at 32.85 riyals, below its initial public offering price of 32.
The oil giant said on Friday it would report 2019 full-year results on March 16.
Among banking shares, National Commercial Bank and Riyad Bank banks were down 0.7% and 0.4% respectively.
In Qatar, the index was down 0.5% with Commercial Bank losing 1.7% and Mesaieed Petrochemical Holding sheding 3.1%.
Qatar’s foreign minister said on Saturday that efforts to resolve its long-running dispute with other Gulf states had been suspended since the start of January.
The UAE, Saudi Arabia, Bahrain and Egypt imposed a political, trade and transport boycott on Qatar in June 2017 over charges it supports terrorism, which Doha denies.
Dubai’s index slipped 0.6% as Emirates Integrated Telecommunications fell 2.2%. Last week the telco reported lower revenue for the year 2019 and cut its dividend.
Construction firm Arabtec Holding declined 4% after it swung to a 774.5 million dirhams ($210.9) net loss in 2019 from a profit of 256.3 million dirhams a year earlier.
