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October 12, 2018

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Stocks fall as IMF word gets no cheer amid global selloff

KARACHI: Stocks on Thursday shook off a big deal of hard-earned gains as investors failed to cheer International Monetary Fund’s (IMF) confirmation of a formal bailout call from Pakistan amid a worldwide rout spurred by spiral in US markets, dealers said.

Topline Securities in its daily market review said country’s status in the MSCI-EM Index also raised investors’ eyebrows as in its next semiannual review of Nov 2018, it was being feared that some stocks were likely to be removed from the index.

“To note, under their current market cap requirements of MSCI global investable index, none of the existing five companies of Pakistan meet the free float requirement,” the brokerage said.

Analyst Ahsan Mehanti from Arif Habib Corporations said stock closed bearish on investor concerns for global equities selloff and economic uncertainty after dismal data on $8.9 billion trade deficit and weak auto sales for Jul-Sep 2018. “Oil stocks took a battering amid slump in global crude oil prices,” Mehanti added.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Shares Index fell 1.02 percent or 393.79 points to close at 38,398.30 points’ level, whereas KSE-30 Shares Index followed the suit with a loss of 1.25 percent or 237.87 points to end at 18,767.36 points’ level. Out of 356 active scrips, 109 moved up, 232 retreated, and 15 remained unchanged in today’s session. The ready market volumes were recorded at 134.604 billion shares, as compared to the turnover of 199.322 billion shares in the previous session. Murtaza Jaffar, analyst from Elixir Securities, said K-Electric led the volume charts and gained more than 5 percent after media reports that government was likely to issue permission to Shanghai Electric Power (SEP) for the purchase of 66.40 percent stake of the utility from M/s Abraaj ahead of Prime Minister Imran Khan’s visit to China in mid-November.

“Our chartist eyes immediate support around 37,500- 37,700 levels, however any break below this area would unfold further downside till 34,600-35,500 level”, Murtaza added.

Since the start of this month the market has been under pressure, which has eroded more than 2000 points. Moreover continuous selling from overseas financial institutions also dampened the investor sentiments. Foreign selling this year has totaled more than $325 million.

According to an analyst entering the International Monetary Fund (IMF) program would raise concerns as the package will arrive with harsh conditions. “They (IMF) want to make exchange rate more flexible, review monetary policy, reduce the circular debt, and reduce losses of state-run companies, trimming fiscal and current account deficits,” the analyst said. Beside this, the capital market came under fire because of the Asian stock markets’ free fall, which commenced from the US markets where Dow Jones slipped 800 points, losing share values worth $842 billion. The highest gainers were Mari Petroleum, which went up Rs51.33 to close at Rs1477.53/share, and Bata Pakistan rising Rs43.50 to finish at Rs1706.00/share.

Companies booking the highest losses were Island Textile as it lost Rs91.52 to close at Rs1,738.88/share, and Sanofi-Aventis slipping by Rs30.29 to close at Rs800.01/share.

K-Electric Limited recorded the highest volumes with a turnover of 12.008 million shares. The scrip gained Rs0.25 to close at Rs5.11/share. The lowest volumes were witnessed in TRG Pakistan Limited, recording a turnover of 12.024 million shares. The scrip lost Rs0.83 to end at Rs23.72/share.

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