Investors cheer Panama verdict: Stocks soar to historic intraday high

KARACHI: Creating history, the Pakistan Stock Exchange’s (PSX) benchmark KSE 100-share Index on Thursday surged more than 1,900 points, the biggest ever intra-day gains, on a Supreme Court’s decision in Panama case that took off a possibility of Prime Minister Nawaz Sharif’s disqualification, dealers said.

The market never witnessed such volatility in the past as the benchmark index moved in the range of 2,149 points before retreating on profit-booking to end with a gain of 1,140.08 points or 2.39 percent. The index settled the day at 48,743.56 points. Previously, the index witnessed highest ever single day surge of 1,406 points in November 2016.

The Supreme Court, in a three-two split decision, ordered a joint investigation team to probe into the corruption allegations against the Prime Minister and his family.

The Index, which had a solid run in the past few days, soared immediately after the court decision, fuelled by hopes that the government would keep reforms’ momentum to accelerate economic activity.

Analyst Abid Ali Habib at Arif Habib Limited said investors cheered continuation of Nawaz government and “they celebrated it with a bang.” “For the last two months a panic like situation prevailed at the bourse… Now that political uncertainty neutralised, investors took fresh bets in the oversold market,” Habib said.

Analyst Faisal Bilwani at Elixir Securities said equities closed thunderously positive after taking investors for an unprecedented and the wildest ride ever as the benchmark KSE 100 Index witnessed a record move of near 2,150 points during the day.

“Trading started cautiously as investors awaited the Supreme Court’s verdict; however institutional flows primarily led by locals helped the wider market post modest gains by mid day,” Bilwani said. “A fresh wave of buying followed the court's decision and that averted threat of PM Nawaz’s disqualification.”

KSE 30-share Index also surged 2.51 percent or 634.20 points to end at 25,926.24 points. As many as 395 shares were active; of which 320 increased, 64 decreased and 11 remained unchanged.

The ready market volumes rose by a whopping 54 percent to 408.163 million shares as compared to 265.654 million shares a day earlier. Chief Commercial Officer Khurram Schehzad at JS Global said the index hit an all-time high on excitement of the court’s decision and settled 1,140 points up.

“Though political uncertainty still persists, yet the market cheered the announcement regardless of it being positive or negative,” Schehzad added. Analyst Ahsan Mehanti at Arif Habib Limited said stocks sharply surged after the Panamagate case ruling, ordering composition of a joint investigation team to investigate the case. “Easing political noise played a catalytic role in record surge,” Mehanti said.

Analysts expect the market to re-test the previous highs of 50,000. But, they added that the joint investigation team’s probe would pose a challenge and might keep investors on tenterhooks.

Ongoing earnings season and budget related expectations will certainly regain more limelight in days ahead.

Dealers are confident that Morgan Stanley Capital International (MSCI) Emerging Market Index’s upgrade will also lead to an excitement and help channel fresh liquidity both from domestic and foreign investors.

They are expecting between $300 and 500 million foreign inflows from the emerging market index tracking funds. Improved visibility of Pakistan’s market would attract other funds/investors as well, they said.

The US equity indices provider MSCI included PSX in its benchmark emerging-market index in June 2016.

The MSCI Pakistan Index will be reclassified to emerging markets status from frontier markets, coinciding with the May 2017 semi-annual index review, while PSX would be inducted in the EM Index in June 2017.

The PSX has already been declared as the Asia’s best performing equity market and the fifth best in the world in 2016 as it disbursed a total annual return of 45.7 percent.

Companies, reflecting highest gains, included Sanofi Aventis, up Rs94 to end at Rs1,992/share and Sapphire Fiber that rose Rs54.62 to close at Rs1,147.12/share.

Companies, with highest losses, included Rafhan maize, down Rs75 to close at Rs7,125/share and Unilever Foods that fell Rs49 to end at Rs6,201/share.  

Highest volumes were witnessed in K-Electric with a turnover of 29.224 million shares. The scrip shed six paisas to end at Rs8.18/share. Engro Polymer was the second with a turnover of 27.638 million shares. It gained 51 paisas to close at Rs26.18/share. TRG Pakistan was the third with a turnover of 20.966 million shares. It gained Rs2.33 to finish at Rs52.83/share.