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Politically-animated week with dull participation led index lose 0.6%wow
Summary

The JUI-F Azadi March with the aim of resignation of Prime Minister Imran Khan gathered momentum this week as its impact on KSE-100 index losing 213 points. History has proved that investors remain cautious as such political agitation may give rise to violence and can create law and order issues. During 2014 similar kind of sit-in led to market down by close to 5 percent in 14 trading session.

The market although under tension during the week remained positive for three sessions and was able to control a big fall as market is witnessing some positive changes which has kept the hope alive for investors. The average volume declined to 15 million from 140 million last week. The foreigners who were seller turned buyer this week with $2.77m and market capitalization fall was controlled from $132 billion to $1 billion this week standing at Rs.6,640 trillion. The KSE-100 index stood at 33,762.48 on Friday close.

The market witnessed the biggest fall on Monday as the news of indiscriminate and ruthless shelling from across the line of control past midnight in which six civilian and a soldier of the Pakistan Army embraced martyrdom. The KSE-100 Index shed 785.42 points to close at 33,084.73. FATF official statement negative impact were also considered by the investors.

On Tuesday the foreigners continued to buy worth $1.85m. The trend continued for fourth day and the market gained 114.23 points to close at 33,198.96. The volume however declined to 84m from 130m on Monday.

The decision on Wednesday by the government to allow marchers to proceed with their protests was welcome by the opposition who agreed to hold talks with government’s negotiating team. The index climbed 240.73 points to close at 33,439.69. The volume improved to 117m.

On Thursday Pakistan and India signed the historic Kartarpur Corridor Agreement allowing Sikh pilgrims a visa-free access to Darbar Sahib where the founder of Sikhism Guru Nanak spent last 18 years of his life. Besides aggressive stance by the opposition of JUI (F) march seemed to have toned down . The market gained 322.79 points to close at 33,762.48.

Stocks remained choppy on Friday as the political concern arose on the news of failing health of the former prime minister Nawaz Sharif and the pending post-arrest bail with courts on medical grounds .The market shed 105.02 points to close at 33,657.46. The volume improved to 171 m.

 

Participants/Activity

On average shares of 351 companies were traded. Of these 156 were gainers and 175 were losers and 20 remained unchanged.

Foreigners were net buyer $2.77m during the week; companies were seller $2.15m, Banks were buyer $1.72m; Mutual fund net buyer $.92m and individuals net seller $3.12m.

Volume leaders during the week were: World Call telecom 54m; Lottee Chemicals 44m; PIBTL 36m; Bank of Punjab 23m; Unity Foods 17m; Fauji Cement 12m; K-Electric 11m; TRG Pak 9m; Quice Foods 7m; Dost Steel Mills 5m and Fauji Fertilizer, Hasol Petrol and D G Khan Cement XD 3m each.

Triggers
  • Reserves held by the State Bank of Pakistan increased by $79 million to $7.893 billion during the week ended on Oct 18. Total liquid reserves of the country stood at $15.187 billion.
  • The central bank received total bids worth Rs.196 trillion for T-bills against which it accepted Rs.532.5 billion highest in 12 months period.
  • K-Electric awarded $650 million contract to German firm Siemens AG and Chinese construction giant Harbin Electric for building a 900 MW combined-cycle power plant and associated grids at Bin Qasim.
  • SBP in its latest ‘Mid-Year Performance Review of the Banking Sector, January-June 2019’ reveals that deposits accelerated to 6.8 percent.
  • Automobile imports plunge as a drop of 27 percent in overall import of completely and semi-knocked kits to $261 million in first quarter of the current fiscal year.
  • Pakistan’s doing business (DB) ranking improved by 28 points to 108th from 136th out of 190 countries in the World Bank’s Ease of Doing Business Report 2020.
  • Pakistan Energy Sukuk-1 (PES-1) issue of Rs.200 billion got listed at the Pakistan Stock Exchange. PES-1 is the largest Shariah compliant financial instrument ever listed at a stock exchange in Pakistan.
Conclusion

Politics and economics keep on adjusting with themselves. Accordingly, the KSE-100 index moves up and down. The Prime Minister has rightly set economics on the priority list. If politics leads to economics than it could be a good option. The Kartarpur Corridor agreement leads to $20 fee with expectation of 5000 visitors daily, a great source of revenue. Government should not play politics over its performance of FATF by deadline of Feb.2020.

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