Stocks fall 2.55pc as investors anticipate economic slowdown

Stocks continued to decline and shed 2.55 percent on Thursday, as investors chose the sidelines due to the likely economic slowdown and expected poor corporate earnings, putting selling pressure on blue chip financial, E&P, and energy shares, dealers said.

An analyst from Topline Securities said that despite recent 150bps hike in policy rate, commercial banks were the worst performing sector, as investors continued to reduce exposure in the market due to the negative sentiments.

“The negative sentiments which are driving the market lower include likely economic slowdown and expected poor corporate earnings.”

Pakistan Stock Exchange (PSX) KSE-100 shares index lost 2.55 percent or 1,002.48 points to close at 38,300.63 points level. KSE-30 shares index followed suit with a low of 2.81 percent or 528.84 points to end at 18,283.16 points level.

As many as 358 scrips were active in the session, of those 80 moved up, 262 retreated, and 16 remained unchanged. The ready market volumes stood at 189.763 billion shares, as compared with the turnover of 138.104 billion shares in the previous session.

Analyst Ahsan Mehanti from Arif Habib Corporation said, “Panic selling was witnessed at the PSX on investor concerns for global equity selloff.”

Slump in global crude oil prices, ongoing political and economic uncertainty, and dismal data on fertilisers, cement and oil sales for November 2018 played a catalytic role in the record fall, Mehanti added.

Salman Ahmad, head of equity sales at Aba Ali Habib also said oil consumption data has been released, which showed that petrol and diesel sales dropped considerably. “Rather, petrol numbers reached decade low,” he added.

Also, the OPEC meeting has been schedule, for which market perception has been that oil supplies would be kept intact, hence putting pressure on crude price. “Oil sector having significant weight in the index recorded hefty declines, which led to an overall slide,” Salman said.

Investor participation declined, as traded volumes increased by 37 percent to 190 million, while traded value went up by 31 percent to $65 million. Continuous indecisiveness about economic issues has been playing havoc with the capital market.

The finance minister said there was no threat to the economy, but observers, looking at rupee devaluation believe that the government planned to sign an agreement with the IMF next month.

Due to the double-digit increase in interest rate combined with rupee devaluation, investors were increasingly finding government securities more attractive compared to the capital market, a dealer said.

The highest gainers were Phillip Morris Pakistan, up Rs154.47 to close at Rs3,439.45/share, and Unilever Foods, up Rs149.00 to finish at Rs7,500.00/share.

Companies that booked highest losses were Indus Motor Company, down Rs61.24 to close at Rs1,173.40/share, and Millat Tractors, down Rs47.99 to close at Rs911.98/share.

Maple Leaf recorded the highest volumes with a turnover of 9.360 million shares. The scrip gained Rs0.01 to close at Rs42.46/share.

The lowest volumes were witnessed in WorldCall Telecom, recording a turnover of 20.670 million shares, and losing Rs0.08 to end at Rs1.58/share.