Turbulence at stocks on US-Iran tension as index momentum up 2.1% wow
The sentiments of the investors kept on changing as the news of the US-Iran conflict heightened to a war like situation which led Index dip deep to 1027 level on Monday. While KSE-100 Index regained 1,165 points on Thursday as President Trump in his speech signals desire for peace with Iran. In the domestic politics the passage of the three Pakistan Services (Amendment) Bills concerning the tenure of services of Chief of Army, Air Force and Navy without any resistance from two major political parties in the opposition added positivity in stock exchange working. The KSE-100 Index crossed the 43,000 points level from the first time from 42,447 points where it stood in August 18, 2018.
During the week stocks Index gained 884 points to close on Friday at 43,207.05. The average volume increased to303 million shares and the market capitalization gained Rs. 87 billion to stand Rs.8,103 trillion. The foreigner remains net buyer with $7.02m.
On Monday, there was blood bath at PSX; Index declined 1,027 points to close at 41,296.24. The fears of escalation of hostilities between the US and Iran led the market to decline.
On Tuesday stocks recovered 608 points on value- hunting as fears of an imminent Iranian retaliation to avenge the US killing of military commander Qasem Soleimani three days ago subsided. The Index closed at 41,904.47.
On Wednesday on the news of Iran responding to US killing of its military commander fired ballistic missiles at two American military facilities in Iraq. The KSE-100 Index shed 546.90 points to close at 41,357.57.
Donald Trump reconciliatory speech reduce the tension on Thursday as stock rallied 1,165 points to close at 42,523.07.
Bulls continued to hold away at the stocks market on Friday as they tossed the KSE-100 Index up by 68.98 points crossing 17 month high to close at 42,207.05.
On average shares of 365 companies were traded. Of these 177 were gainers and 174 were losers and 14 remained unchanged.
Foreigners were net buyer$7.02m during the week; companies were buyer by $2.2m, Banks were seller $0.91m; Mutual fund net buyer $5.84m and individuals net buyers $6.22m.
Volume leaders during the week were: Bank of Punjab 160m; K-Electric Ltd 151m; Unity Foods 73m; TRG Pak Ltd 63m; Siddiquesons Tin 36m; World Call Telecom 20m; Hascol Petrol 19m; Fauji Cement 14 m; Maple Leaf 11m and Fauji Foods 8m.
- Exports fall 3.96 percent in on year-on-year in December 2019 despite cash support and multiple currency depreciation.
- SBP reserve during the week ending Jan5 rose to 21 months high increasing by $14.3 million to $11.503 billion.
- With a jump of Rs.2,600 and Rs.2,230 per tola and 10 gm in a single day on Monday the local gold prices scaled new peaks of Rs93,400 and Rs.80,075 respectively.
- Pakistan’s economy is unlikely to meet GDP growth target of four percent whereas inflation is expected to remain within the 11-12 percent range said the SBP in its first quarterly report of FY20.
- Pak Suzuki to shut down production for four days.
- Tractors sales plunge 40 percent.
- World Bank revises growth projections downward. Pakistan growth is expected to rise to 3 percent in next fiscal year after bottoming out at 2.4 percent in FY 2019-20-about 0.3 percent lower than its estimate of June 2019 –before touching 3 percent next fiscal year and 3.9 percent in FY2022.
Pakistan Stock Exchange Chairman Sulaiman Mehdi consider macroeconomic stability as the reason for upsurge in share value in particular turnaround in the current account balance which stood at $19.9 billion with just $1.5 billion in the four months of 2019-20. Yields in the 10-year Pakistan Investment Bonds had receded from 14 percent to 11,25 percent below the bench mark interest rate for the first time in a decade, which led to cut in rate of return on National Savings Schemes (NSS) which signal flow of funds into equity market.
On the political front some reconciliation between the government and the opposition following the consensus passage of Army, Air Force and Navy amendment Bills is good equity market.
Raees Uddin Khan,
Research & Development Institute of Securities Management Research& Training (Pvt) Ltd, Karachi.
Dated: Jan 11, 2020