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Declining market trend continues, index down 3.57%wow
Summary

It was a short week of four days trading due to Kashmir Day holiday on Wednesday 5th Feb. The stock market kept on declining since starting from January 13 to close on Feb 7, 2020. During the period it shed 1,725 points to close at 40,143.63 on this Friday.

During the period under review, the market lost 148.73 points and the average volume declined to 168m shares from 188m previous week. The market capitalization also declined by Rs.276 billion to close at Rs.7,575 trillion. The foreigners were seller by $14.18m while individual were buyer by $7.7m.

On Monday, the equity market closed on a negative mode with benchmark KSE-100 Index dropping 1,222 points closing at 40,409.36. The hardline inflation boomed to a multi-year high of 14.56%YoY surpassing the market expectation of 13.5 to 13.7%.

The stock market on Tuesday closed on a positive note. It gained 474.86 points to close at 40,884.24. The volume declined to 146m.

The stock market on Thursday closed in a negative after Kashmir Day holiday on Wednesday. The index shed 159.84 to close at 40,724.40. The volume remained the lowest of the week with 128m.

The nightmare continued on Friday. The early day trading gained 145 points but later on the index slumped to 40,143.63 shedding 148.73 points. The volume improved to 194m from 128 m on Thursday.

Participants/Activity

On average shares of 351 companies were traded. Of these 118 were gainers and 218 were losers and 15 remained unchanged.

Foreigners were net seller of $14.18m during the week; companies were seller $0.62m, Banks were seller $1.64m; Mutual fund net seller $6.72m and individuals net buyers $7.7m.

Volume leaders during the week were: Bank of Punjab 58m; Hascol Petroleum 51m; Maple Leaf Cement 38m; Unity Foods Ltd 30m; Lotte Chemicals 26m; K Electric 6m; World Call Telecom and D. G. Khan Cement 7m each.

 

Triggers
  • Reserves held by the SBP jumped by $359 million to $12.274 billion during the week ended on Jan 31. The total liquid reserves stood at $18.645 billion during the period under review while holding of commercial banks stood at $6.371 billion.
  • Moody’s Investors Service on Thursday maintained its forecast for the stable outlook of five leading Pakistani Banks over the next 12-18 months.
  • The country’s domestic cement despatch edged up by 3.86 percent to 23.638 million tons in 7MFY20 from 22.759 tons while exports jumped to 25.23 percent to 5.14m tons from 4.141m.
  • The country’s cotton production fell by 19.98 percent, leading to a loss of 2.119 million bales up to Feb 1, 2020.
  • SECP on Monday notified the new brokers’ regime where stock brokers will now be categorized according to their networth and governance requirements into three categories – Trading and Clearing Broker (T&C);Trading and Self-Clearing (TSC) and Trading Only (TO). The amendments were required to implement AML/FATF requirements which require intermediaries to have a comprehensive protocols to curtail money laundering and terror financing risks.
  • Uncertainty grows around China imports as Supply chain disruption feared if Chinese New Year closure, which is extended the closure of business till Feb. This year, the outbreak of the 2019 Novel Coronavirus during these holidays has extended the shut down.
  • An IMF team sent to review benchmarks set as part of the deal began formal meetings in Islamabad on Tuesday that will continue until February 13.
Conclusion

The foreigners are an important participant in the stock market. The buying and selling trend of the foreigners move the index appreciably.

The Perception and Investment survey 2019 was conducted during the last quarter of 2019 among the leading foreign investors of the country. Showing concern over poor progress on documentation of economy, high interest and devaluation, the foreign investors have expressed cautious optimism of the future growth potential.

OICCI President Shazad Dada said the survey showed that on a number of business climate parameters foreign investors remained positive and were upbeat on the performance of their respective business entities in Pakistan with 75 percent of the respondents indicating willingness to recommend new FDI in Pakistan to their parent companies.

Raees Uddin Khan,
Research & Development Institute of Securities Management Research & Training (Pvt) Ltd, Karachi.
Dated: Feb 8, 2020

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