Stocks shed gains as MSCI, FATF concerns send investors packing

Stocks on Thursday gave up most of the yesterday’s gains as profit-takers came in force amid fears that Pakistan might lose its current status in the MSCI’s review, while global anti money laundering watchdog’s reservations also weighed, dealers said.

Topline Securities in a daily market review said equities returned to the red zone after previous two consecutive positive trading sessions due to negative impact of news flow and market expectations which hit the investors’ sentiment.

“A possible downgrading of Pakistan from emerging to frontier market by MSCI, serious reservations by APG (Asia/Pacific Group on Money Laundering) over insufficient physical actions on ground against proscribed organisations, expectations of a change in policy rate ranging from 0-75 bps, dragged the index down,” the brokerage said.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index lost 1.06 percent or 412.06 points to close at 38,552.95 points, whereas KSE-30 shed 1.30 percent or 239.47 points to end at 18,213.36 points.

Of 332 active scrips, 75 moved up, 243 retreated, and 14 remained unchanged. The ready market volumes stood at 132.150 million shares, as compared with the turnover of 228.670 million shares in the previous session.

Analyst Ahsan Mehanti from Arif Habib Corporation said stocks closed bearish on concerns over FATF’s serious reservations over insufficient actions and likely warnings on APG delegation’s visit ahead of decisions to remove the country out of FATFs grey list.

“Uncertainty over terms and outcome of IMF (International Monetary Fund) talks for $12 billion possible bailout package ahead of monetary policy led to a negative close,” Mehanti added.

Madiha Javed, head of research from Ismail Iqbal Securities, said the market remained bearish throughout the day as investors chose to book profits following yesterday’s rally.

Javed said in terms of index points, exploration and production contributed the most to index’s decline followed by cement manufacturers and commercial banks. “Investors continue to look forward to tomorrow's monetary policy where a 50bps increase seems to be the consensus - any other outcome would drive the market sentiment going forward,” she added.

The main factor behind the evaporation in share values was the report that Pakistan would soon be removed from the emerging market index, the shortest period for any market in the world indices. In June 2017 the PSX became part of the emerging market index but since then it has witnessed a decline of 41 percent, the second biggest erosion.

A leading trader said that FATF issue was also a dampener as many believed that several tough conditions had been laid down and if they not addressed immediately or before September meeting, the country’s might face multiple financial disturbances.

The highest gainers were Rafhan Maize, up Rs335.00 to close at Rs7045.00/share, and Nestle Pakistan, up Rs32.53 to finish at Rs7032.01/share. Companies that booked highest losses were Unilever Foods, down Rs99.00 to close at Rs7400.00/share, and Bata Pakistan, down Rs47.82 to close at Rs1652.08 / share.

Al-Ghazi Tractors Limited recorded the highest volumes with a turnover of Rs3350 shares. The scrip gained Rs6.20 to close at Rs444.79/share. The lowest volumes were witnessed in Unity Foods recording a turnover of 43.177 billion shares, whereas the scrip loss Rs0.5 to end at Rs2.37/share.