Pakistan Stock Exchange (PSX) took a breather, adjusting 1.95 percent during the week ended May 19 and investors flocked to book profits as Morgan Stanley Capital International (MSCI) upgrade euphoria settled down ahead of monetary policy statement and federal budget.
Analyst Adnan Sami at Topline Securities said post- MSCI review profit-taking peeled 1.95 percent off the KSE 100-share Index. “Pressure was also seen later in the week due to a risk-off approach after the Comey Memo roiled global markets.”
The memo said the then-FBI Director James B. Comey had written notes in February indicating that President Trump had asked him to end an investigation of former White House national security adviser Michael T. Flynn.
The KSE 100-share Index of PSX shed 1.95 percent or 1,008.88 points to close the week at 50,742.03 points. KSE 30-share Index lost 2.69 percent or 741.75 percent to end at 26,787.33 points.
Average trading remained flat at 350 million shares/day with retail favorites dominating the volumes charts.
“Post MSCI review, the market has retraced 3.1 percent or 1,646 points from May 15 all time high closing of 52,388 points,” Sami added.
US Index provider MSCI reclassified Pakistan as an emerging market from frontier market status and added six securities in its main board and 27 shares in small-cap index, effective June 1.
Banks decreased 3.6 percent, cement sector dropped 3.8 percent and power generation companies dipped 4.1 percent. They were the major laggards during the week.
“In the power generation sector, Hub Power Company (down 7.43 percent) led the downside on reported foreign selling,” Elixir Securities said in a report. “While major banks succumbed to profit-taking after MSCI inspired rally.” Foreigners remained net sellers during the week, offloading securities worth $16.4 million.
BIPL Securities said the week started off on a bullish note with the Index gaining 1.2 percent on the first trading session of the week on the back of MSCI euphoria. “However, confusion regarding pro forma weight in the MSCI Emerging Market index resulted in bearish sentiments for the remaining part of the week.”
MSCI constituents (Habib Bank, United Bank, Lucky Cement and MCB Bank) led the downside, cumulatively contributing 664 points to the Index downside in the outgoing week.
Analyst Faizan Ahmed at JS Global Capital said local institutional investors, such as banks and local companies, stayed sellers with respective $4.8 million and $4.7 million worth of net selling during the week, putting pressure on the overall index. “On the other hand, local individual investors continued to show optimism with $6.8 million worth of net buying.”
During the week, National Accounts Committee revised up growth at 5.28 percent for 2016/17. The National Economic Council set total development budget at Rs2.140 trillion to boost growth to 6 percent for FY18.