Nawaz’s disqualification cost Pak capital market Rs859 bn in 30 days

ISLAMABAD: Pakistan stock market has paid a heavy price on the Panama issue as the PSX lost Rs859 billion in only 30 trading sessions after the Supreme Court’s verdict of July 28, 2017 to disqualify Nawaz Sharif from the post of Prime Minister of Pakistan.

The loss amounts to almost Rs1,800 billion if compared to the highest market capitalisation of Rs10 trillion as on May 24, 2017. Arif Habib — a stock market expert and a leading businessman while talking to The News has confirmed that prime minister’s disqualification is one of the prime factors for the downfall of stock market. He claims the stock market has lost almost Rs2,000 billion compared to the highest market capitalisation on May 24, 2017.

In addition to the disqualification of Nawaz Sharif, he also attributed the decrease in the market capitalisation to factors including the trade deficit, market unfriendly budget and risk of devaluation of the currency.

An analysis of the stock market data available at the PSX website shows that a total of Rs951 billion ($9 billion) has been wiped out from the market since the date of the first decision of the five-member bench on April 20, 2017 till September 12, 2017. Most notably, Rs859 billion ($8 billion) i.e. 90 percent of the total loss has been incurred in only "thirty trading days" after the decision of the apex court of July 28, 2017 that disqualified Nawaz Sharif as Prime Minister of Pakistan.

The total foreign selling observed at Pakistan Stock Exchange after April 20, 2017 till September 12, 2017 amounts to Rs28.5 billion. The information available at National Clearing Company of Pakistan Limited (NCCPL) website shows that Rs11.4 billion i.e. 60 percent of the total selling by foreigners during the period was witnessed after the July 28 decision of the apex court. On the other hand, during the same period of last year the foreign inflow of Rs2.5 billion at PSX was observed.

It is pertinent to mention here that from April 20, 2017 to September 12, 2017, KSE-100 Index has registered a total decrease of 7464 points (48,743; April 20, 2017 and 41,279: September 12, 2017) i.e. 15 percent. Notably, 38 percent of this total decrease has been registered after the decision of the apex court of July 28, 2017. The highest ever KSE-100 was reported on May 24, 2017 at the level of 52,876. For the period April 20, 2017 to September 12, 2017, the average traded volume and value on PSX have decreased drastically which reflects loss of investor's confidence. The average volume of shares traded per day at PSX was 269 million. However, after the decision of the apex court on July 28, 2017, the average volume decreased by 30 percent to 190 million shares. Similarly, the average traded value decreased by 32 percent from Rs14.578 billion (average for April 20, 2017 to September 12, 2017 to Rs9.8 billion (average for May 28, 2017 to September 12, 2017).

The loss not only affected the investors including pension and mutual funds policy holders where people invest for retirement planning etc but the sluggish market activity has adversely affected the amount of tax deposited in the national exchequer.  Talking to The News, Arif Habib said the stock market cap touched the highest point of around $100 billion on May 24, 2017 and right now it has faced a 20 percent downfall which means $20 billion loss to the market. The decline of stock market started actually from the fiscal budget as it was not market friendly. The market was expecting net inflows from foreign investors but unfortunately it happened quite opposite to it. However, he said the political transition has started getting smooth and the market has started regaining the investors’ trust which is evident from the export numbers of August.

Scores of villagers of Chak 304/JB, Kathore blocked the Gojra-Jhang road on Thursday for more than an hour in protest against Fesco’s failure to repair an out-of-order power transformer.

The villagers told the reporters that high voltage has affected their electric appliances and they have lodged several complaints to Faisalabad Electric Supply Company (Fesco) but to no avail. The protest led to blockade of the road leading to motorway (M-4). They were demanding compensation against the loss of their appliances. Later, they ended their protest when police officials assured the villagers of apprising their concerns to the Fesco authorities.