Stocks tumble as global oil rout batters energy shares

Energy shares on Friday weighed heavy on the capital market as it tumbled tracking international stocks and oil rout after a recent spike in global coronavirus cases reignited scares the world economy was likely at the risk of a depression, dealers said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index lost 2.95 percent or 1162.44 points to close at 38,219.67 points, while KSE-30 followed sank 3.85 percent or 696.71 points to end at 17,385.40 points.

Brokerage Topline Securities in a note said, “Reemergence of coronavirus fears triggered yet another global selloff and its spillover washed the gains away at the local bourse”. “Despite OPEC’s (Organization of the Petroleum Exporting Countries) vow to cut down production, oil prices fell sharply and as a result exploration and production sector lost 4.56 percent during the trading session.”

The brokerage added that banking sector too shed 3.67 percent as investor’s factored in potential decline in policy rate in upcoming monetary statement. Of 355 active scrips, 67 were up, 265 down, and 23 ended unchanged. Volumes shrank to 244.454 million shares, compared to 340.722 million in the last session.

Samiullah Tariq, director research at Arif Habib Limited, said, “The downturn in global markets and spreading of virus to different countries shook the investors’ confidence where foreign funds were the continuous sellers in the market further impacted the overall trend at local bourses”.

The market received jolt owing to fall in crude oil price which translated in the local oil and gas exploration stocks which witnessed big trimming in the big ticket stocks, Tariq added. Analyst Ahsan Mehanti from Arif Habib Corporation said, “Stocks fell across the board on global equity selloff and slump in global crude oil prices on fallout of corona virus outbreak”.

Dismal petroleum and auto sales in February, falling local fertiliser prices and concerns over foreign outflows and delays in privatisation of SOEs dragged the stocks down, Mehanti added. Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said, “The carnage at the stock market was a reflection of the world markets which suffered widespread declines especially in the US Dow Jones, which plunged sharply”.

Moreover, reports that coronavirus spread to other countries also added to the investor concerns, Ahmad added.

“Foreign funds and local financial institutions have now been on the back foot after international rating agencies, Standard and Poor’s and Moody’s, repeatedly cautioned fund managers that a crisis-like situation might arise,” he said. He said the market was in the oversold zone, while easing treasury bills cut-off yields in the secondary trading of the last auction hinted at a likely trimming of benchmark interest rate was in the making.

“However as soon as coronavirus crisis comes under control, the capital market will act accordingly,” Ahmad said. The top gainers were Nestle Pakistan, up Rs100 close at Rs7,700/share, and Colgate Palmolive, up Rs59.99 to finish at Rs2,399.99/share.

Phillip Morris Pakistan, down Rs99.96 to close at Rs1,899.99/share, and Sapphire Fibre, down Rs61.59 to close at Rs818.40/share, were the major losers. Maple Leaf Cement led the chart volume chart with 27.254 million shares, but lost Rs0.18 to end at Rs28.02/share.

The lowest volumes were witnessed in Oil & Gas Development Company, recording 5.401 million shares, while it lost Rs8.09 to end at Rs115.67/share.