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POLITICAL TURMOIL CONTINUE TO HAMMER KSE-100 INDEX, SHEDDING 2,210 POINTS
SUMMARY

The week at Pakistan Stock Exchange (PSX), shorter by one day, due to holiday on Pakistan’s 70th anniversary on 14th August, continued its sliding trend this week too. PSX felt the heat of political tension developing due to number of events, which created uncertainty for the investors. As such after losing 1,588 points last week, this week it further lost 2,210 points .Volume too declined to 183 million from 190 million last week. The market capitalization decreased from Rs9.421 trillion to Rs8.991 trillion this week.

KSE-100 Index hit lowest level 43,044.12 in 8 months on Thursday. Market closed on Friday at 43,078.38. Dubious statements from former prime minister, show of strength by PTI in Islamabad, PAT sit-in on Aug 16 and call of NAB for investigation to former premier and his sons created a heated political environment and uncertainty and volatility in the market.

The market opened on Tuesday after three days long holidays saw the investors confused and uncertain over political development during the week. In this narrative, the market lost 1,389.04 points to close at 43,899.45 points. Some blame volatility in the market to asset allocation funds, which moves up or down as per movement of the market. Others attribute this due to redemption by their clients. Five stocks that contributed most to the decline were OGDC, Engro Corp, HBL, MCB and Hub Power wiping off 322 points from the Index.

On Wednesday KSE-100 Index sapped three-day losing streak and gained 287.51 points to close at 44,186.96 points. The continuity of political uncertainty has led investors from growth stocks to value one.

On Thursday, the market hit KSE-100 lowest of 8 months in intraday of 43,044.12. The market closed at 43,136.06. Announcement of NAB to summon ex-premier and his two sons for investigation brought the turbulence in the market.

Despite recovery on Friday, KSE-100 lost 57.68 points to close at 43,078.36 points. An uncertain political scene and discouraging financial results denied investors interest in the market.

 

PARTICIPANTS/ACTIVITY

On average shares of 379 companies were traded. Of these 95 were gainers and 269 were losers and 15 remained unchanged.

Foreigners were net seller of $2.04m during the week; companies were net buyer $6.36m, Banks were buyer $9.38m; Mutual fund net seller $17.71m and individuals net buyer $1.51m.

Volume leaders during the week were: Azgard Nine 57m; B.O.P 39m; Aisha Steel Mills Ltd 35m; TRG Pakistan 32m; K-Electric 20m; Engro Polymer 9m; Lotte Chemical and Sui Southern Gas 8m each; Dewan Motors 7m.

TRIGGERS
  • Foreign Investment jumps by 162% to $222.6 during July-2017
  • Fewer Pakistani finding work in Saudi Arabia. Pakistan exported 77,600 workers in Jan-Jun as opposed to 462,592 in entire 2016
  • Reserves slide continues. Total liquid reserves dropped by $88 million to $19.94 billion on Aug11
  • China’s debt on a dangerous trajectory, warns IMF
  • Exporters meeting with Prime Minister to devalue the currency
  • OGRA cutting rate for SSGC by Rs10/unit
CONCLUSION

Market seemed to be guided by the political forces. Coming weeks we expect more political developments, which can bring volatility in the market. Technically there is a strong support near the current level and could expect a bounce back in the oversold position.

RAEES UDDIN KHAN – Research & Development Institute of Securities Management & Research Karachi

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