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Stocks succumb to selling for second day as uncertainties bite


July 6, 2019

Stocks on Friday ended lower weighed down by a profit-booking spree that continued unabated for second day amid concerns over economic outlook, higher gas/power tariffs, and the government’s crackdown on tax evaders, money-launderers, and asset-concealers, dealers said.

Salman Ahmad, head of institutional sales at Aba Ali Habib said, “Uncertainty looms large following the approval of finance bill for this fiscal year and several business associations are protesting against the new measures”. “Moreover benami act and confiscation of assets also sent negative vibes to general investors,” Ahmad added.

Ahmad further said following the International Monetary Fund (IMF) nod for a bailout package worth $6 billion, Dr Hafeez Shaikh, advisor to Prime Minister on Economic Affairs had said an economic plan was in place and measures taken by the government would surely put economy back on track.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index lost 1.10 percent or 380.60 points to close at 34,190.02 points level. KSE-30 shares index followed suit with a low of 1.31 percent or 214.12 points to end at 16,124.70 points level. Of 296 active scrips, 73 moved up, 212 retreated, and 11 remained unchanged. The ready market volumes stood at 51.245 million shares, compared to a turnover of 111.859 million shares in the previous session. A leading trader said investors were upset after the emergence of new regulations that officials of Securities and Exchange Commission of Pakistan (SECP) have been empowered to raid any company to check the data and other financial matters. Moreover, in post Asset declaration scenario officials would investigate undeclared assets and other holdings were taken as the negative move, the trader added.

He said there had been a general perception in the market that economy was been slowing owing to strict regulations and documentation drive, which would drag the sales of several listed companies, especially those from cement, auto, and steel sectors. The formal approval of the IMF package, the organisation’s projections of 13 percent inflation in FY20 has soured market sentiments, which led to the recent selling spree. Topline Securities in a report said although IMF loan approval would partially restore confidence on macro-economic stability, the sluggish economic growth, further monetary tightening, and aggressive tax revenue targets in the medium-term were likely to keep investors participation at bay.

The government was already targeting over 35 percent growth in tax revenues (additional ~Rs1.6trn), which was the highest in two decades, the brokerage said, adding the program aimed to increase revenues by 4-5 percent of the GDP during its tenure.

“We believe the already aggressive revenue targets in Budget FY20 may lead to mini-budget/ more taxes in the current year to successfully meet the IMF targets,” the Topline said in the report.

The highest gainers were Nestle Pakistan, up Rs51 to close at Rs6800/share, and Sapphire Fibre, up Rs47 to finish at Rs997/share.

Companies that booked highest losses were Sanofi-Aventis, down Rs30 to close at Rs575/share, and Colgate Palmolive, down Rs16, to close at Rs2060/share.

Lotte Chemical recorded the highest volumes with a turnover of 6.938 million shares. The scrip gained Rs0.32 to close at Rs16.93/share. The lowest volumes were witnessed in K-Electric Limited, recording a turnover of 1.225 million shares, while the scrip lost Rs0.07 to end at Rs4.22/share.

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