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April 23, 2019

Stocks fall as investors wary of new hands at financial helm


April 23, 2019

Stocks on Monday lost over one percent as investors switched to risk-off mode following a choppy change of hands at the helm of economic affairs that fed into fears on the fate of measures set in motion by the former finance manager and the overall state of economy, dealers said.

Topline Securities in its daily market review said the market shed 391 points despite the newly finance advisor Dr Abdul Hafeez Sheikh’s confirmation that International Monetary Fund (IMF) negotiations were in progress and this replacement would not delay a possible loan deal in any way.

“The finance advisor further tasked FBR (Federal Board of Revenue) to simplify tax amnesty scheme which is expected to end before the IMF bailout program commences on July 1, 2019. Even this failed to entice investors into fresh buying,” the brokerage said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index lost 1.05 percent or 390.78 points to close at 36,901.69 points, whereas KSE-30 took a hit of 1.10 percent or 195.80 points to end at 17,543.57 points.

Of 305 active scrips, 62 moved up, 227 retreated, and 16 remained unchanged. Traded volume was down 29 percent to 125.964 million shares, as compared to the turnover of 177.355 million shares in the previous session.

Analyst Ahsan Mehanti from Arif Habib Corporation said stocks closed bearish amid pressure in scrips across the board on weak earnings outlook.

“Dismal earnings announcements in oil sector, dismal data on oil, cement and auto sales for March 2019, IMF reservations on proposed tax amnesty plan, uncertainty over terms of bailout package and pre-budget uncertainty, led to the erosion of over a percent at the apex bourse,” Mehanti said.

Salman Ahmad, director institutional sales at Aba Ali Habib, said sudden changes in the country’s main driving force -finance minister- sent negative signals and compounded economic misgivings. Domestic as well as foreign investors are tracking these developments closely as the future trends at the capital market mostly hinge on them.

A leading analyst said the abrupt removal of Asad Umar was stoking controversy over the grounds he was asked to quit as economy had been reeling under massive twin deficits -fiscal and current account- long before the former Engro chief took the office of finance minister.

All the previous government failed to take any bold steps to curtail deficits, taking only short-term measures and carrying out window dressing. Foreign investors are still at bay and foreign direct investment has plunged sharply in the nine months ended March 31, 2019, where outflows from the capital market in the same period amounted to $400 million, which is an alarming sign.

The highest gainers were Faisal Spinning, up Rs11.16 to close at Rs249.00/share, and Blessed Textile, up Rs9.98 to finish at Rs260.00/share. Companies that booked highest losses were Rafhan Maize, down Rs344.99 to close at Rs6850.01/share, and Nestle Pakistan, down Rs111 to close at Rs7789.00/share.

Lotte Chemical recorded the highest volumes with a turnover of 19.719 million shares. The scrip gained Rs1 to close at Rs16.08/share.

The lowest volumes were witnessed in Pioneer Cement, which recorded a turnover of 10.608 million shares, losing Rs0.37 to end at Rs25.22/share.

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