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Pakistan’s stocks index recovers after earlier world markets jitter
Summary

Trading at Pakistan Stock Exchange (PSX) this week was of four days as Monday remained closed for working due to Kashmir day holiday.

On Monday ,the Wall Street saw Dow Jones Industrial Average crash 1,175 points, a big single day drop. On a promising US jobs data that created fear of interest rate hike, turning investors away from stocks and towards bonds. PSX remained affected due the global equity sell-off. The foreigners throughout the week remained seller worth $8.5m during all four working days. Locals at PSX fear that a rapid tightening in interest rates by US Federal Reserves will likely result in liquidity fleeing from risky emerging markets to the US bonds that are considered risk free assets.

On Tuesday, the impact of international market affected PSX and the stocks went down to close at 43,885.51. However, it was a relief as no unusual heavy outflows were recorded as net foreign outflows was $0.92 m. The KSE-100 Index recovered after over 800-point plunge to shed 415.69 points. The positive news was World Bank signing loan of $305m with Pakistan.

On Wednesday with the recovery in the international market positive returned to PSX as the Index gained 210.98 points to close at 44,096.49. Highlight of the day was Sindh High Court’s final judgment regarding case of increase in regulatory duties during October. On political front, the US State Dept said that they could consider ending suspension of security assistance to Pakistan if Pakistan takes action. On economic front one of the Chinese companies has shown interest in investing $1 billion in Pakistan Post Logistics Company.

On Thursday, profit-taking in key stocks pushed the benchmark Index below 416.62 closing at 43,679.87. A slump in the global crude price led the oil sector to a lower close .The other sectors that dragged the Index were cement, engineering and power generation.

On last day Friday, the PSX managed to close on positive note as stocks gained 128.93 points to close at 43,808.80. The local investors remained unaffected to volatility of Dow Jones, five-month slow of European stocks and a turbulent session in Asia.

The average volume during the week declined to average 245m per day while the market capitalization declined to Rs9.099 trillion.

 

Participants/Activity

On average shares of 374 companies were traded. Of these 145 were gainers and 211 were losers and 18 remained unchanged.

Foreigners were net seller of $8.5m during the week; companies were buyer by $0.84m, Banks were seller $1.55m; Mutual fund net seller $5.04m and individuals net buyer $8.77m.

Volume leaders during the week were: Azgard Nine 81m; TRG Pakistan 73m; Fauji Foods Ltd40m; Aisha Steel Mills 35m; Lotte Chemical 33m; Southern South Gas 29; Bank of Punjab 17m; Utility Foods Ltd 14m and Byco Petroleum 12m.

Triggers
  • China agrees to accommodate Pakistan’s concern on FTA
  • The country’s total liquid foreign exchange reserves amounted to $19.18 for week ended on Feb 2.
  • The JS Research reported that the gross advances of scheduled banks increased by 20 percent year-on year to reach Rs.6.56 trillion by the end of January 2018.
  • Rice exports cross $1 billion in seven months (July-Jan 2018)
  • Court removes regulatory duty from over 350 goods.
Conclusions

The market recovered little bit but still shedding 492 points to close at 43,808. The foreigners turning net seller $8.50m while individual net buyers worth $8.77m.

 

Raees Uddin Khan
Research & Development, Institute of Securities Management Research & Training (Pvt) Ltd, Karachi.
Dated: February 10, 2018

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