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Warmongering push KSE-100 index down 1.2 wow
Summary

The gravity of Indo-Pak tension started to build up when on last Sunday Prime Minister Imran Khan gave a speech urging India’s Prime Minister to give peace a chance. The Indo-Pak tension was building up since Pulwama attack in India on Feb.14. It reached to its climax this week.

The KSE-100 Index was negative since last two days of the previous week. The exchange of airstrikes this week between India and Pakistan on Line of Control (LoC) worsened the situation and had its impact on KSE-100 Index, which lost 477 points during the week to close at 39,539.02 on Friday.

There were wild fluctuations in the KSE-100 Index, which at time was down 1,491 points to a gain of 659 points during the week .The foreigners who were buyer last week turned seller to $1.31m while mutual funds and individuals off loaded their portfolio by $11.31m and $10m respectively. Due to brisk buying and selling, the average volume this week improved to 160 million from 105 million last week. The market capitalization too improved by 131 billion to stand at Rs.8,085 trillion on Friday.

The KSE-100 Index gained grounds on Thursday and Friday after the announcement by the premier on Thursday to release Indian pilot on Friday. The Index added 846 points on last two days of the week as investors saw de-escalation of the border tension. The individual investors turned buyers by $2.63m in these two days.

During the week, the KSE-100 Index declined on Monday, Tuesday and Wednesday as 39,606.34 (-409.34);38,821.67 (-728.12) and 38,692.69(-128.98). It however recovered on Thursday and Friday as 39,054.61 (+361.92) and 39,539.02(+484.41).

Participants/Activity

On average shares of 357 companies were traded . Of these142 were gainers and 197 were losers and 18 remained unchanged.

Foreigners were net seller $1.31m during the week ;companies were buyer by $4.75m, Banks were buyer $3.53m; Mutual fund net seller 11.31m and individuals net seller $10.00m.

Volume leaders during the week were: Bank of Punjab 92m, K-Electric 47m; Fauji Cement 18m; Pak Elektron 14m; Engro Polymer and Lottee Chemical 12m each; Pak Int’l Bulk & World Telecom 10 m each. Engro Polymer 8m; Maple Maple Leaf Cement & OGDC 6m each; Siddiquesons Tin & UBL 5m each.

 

Triggers
  • Consumer Price Index (CPI), Wholesale Price Index and Sensitive Price Index (SPI) have witnessed uptrend in February 2019 over February 2018. It increased over January by 0.64 percent, 0.90 percent and 2.21 percent respectively.
  • The Fitch Solutions claims that Pakistan and IMF will reach an agreement over a bailout soon ,with a potential bailout size of about $12 billion.
  • China would give $1 billion grant to Pakistan for early harvest projects of socioeconomic development and agriculture sectors under the second Phase of CPEC.
  • In order to address circular debt issue Government has issued the first-ever Pakistan Energy Sukuk-1 (PSE-1) worth Rs.200 billion
  • “No mercy for money-launderers,” said Prime Minister Imran Khan while chairing a high-level meeting to review measures to curb money laundering in the country. Given the limited progress on FATF action plan items due in January 2019 Pakistan is given deadline of May 2019.
  • FBR provisional collection stood at Rs2328 during July-Feb (2018-19) reflecting a shortfall against the target of Rs2,655 billion for the first eight months of current fiscal year 2018-19.
  • POL prices were increased for March, however, lower than OGRA recommendation.
Conclusion

Market took beating this week, falling for three sessions amid heightened tension between India and Pakistan. For the last two sessions KSE-100 Index gained 846 points which shows concern pertaining to the conflict between the two neighbors seems to have subsided to some extent. A comparison with BSE index, Bombay, India shows the similar trend with ending its week nearly 0.4 percent higher.

Finance Minister Asad Umar’s statement on Friday that Pakistan’s economy is strong enough to defend the country as all economic indicators have shown positive signs during tensions with India this week. The statement should lend support to stock investors.

Karachi
Dated March 2,2019

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