Stocks plunge 2.5pc as region feared on verge of war

Stocks on Monday tumbled, tracking global markets as fears of a possible US-Iran showdown in the Persian Gulf set off an across-the-board panic-selling rampage that led to one of the biggest one-session losses, dealers said.

Pakistan Stock Exchange’s (PSX) KSE-100 shares index plunged 2.43 percent or 1027.06 points to close at 41,296.24 points, while KSE-30 slumped 2.39 percent or 464.66 points to end at 19,009.10 points level.

Analyst Ahsan Mehanti from Arif Habib Corporations said, “Stocks were hit by record loss as global equity sell-off continues on US-Iran tensions feared to culminate in a military conflict”.

Mehanti said late session support was witnessed in blue chip stocks amid surging global crude oil prices and upbeat data presenting 31 percent reduction in trade deficit for July-December 2019 to $11.64 billion and higher exports.

“Rupee instability and concerns over ongoing foreign outflows dragged the market down,” he added.

Of 359 active scrips, only 28 moved up, as many as 325 retreated, and six held a status quo. Volumes shrank to 266.633 million shares, compared to 322.885 million in the previous session.

Samiullah Tairq, director research at Arif Habib Limited, said, “The sole reason for the decline is the rising temperature in the region, which pushed the crude oil prices to over three-month high mark”.

Moreover, persistently higher crude oil price had always been a bad omen for countries like Pakistan and it might clip gains made in the macroeconomic indicators like trade deficit, current account deficit and exchange rate, Tariq added.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said “The conflict between US and Iran heightened the regional situation with indices falling across the global. Local market also moved down owing to foreign selling”.

Furthermore, another reason behind this fall was downward technical correction as the market was in an overbought zone following a steep rise lately, Ahmad added.

The market from the word go was in the minus territory and losses piled up because of the regional situation following the US attack on an Iranian commander. Crude oil and gold prices shot up in the wake of this incident, while global stocks from Japan’s Nikkei to UK’s FTSE plunged in the range of one to two percent. On Sunday, Middle Eastern markets were also down by more than 2 percent and Monday was not much different with 0.3 percent to 1.5 percent losses.

A leading analyst said exchange of open threats between Iran and the US following the assassination of Iranian military general Qasem Soleimani has created panic amongst the investors across the globe and Pakistan borders with Iran.

Arif Habib Limited in a daily analysis said, “Market declined 1116 points during the session and closed with -1027 points”.

Furthermore, geo-political and regional security concerns took toll on market sentiment and investors resorted to selling, the brokerage added.

The highest gainers were Bhanero Textile, up Rs39.95 close at Rs839/share, and Jubilee Life Insurance, up Rs9.99 to finish at Rs399.99/share.

Top losers were Rafhan Maize, down Rs165 to close at Rs7,255/share, and Unilever Foods, down Rs150 to close at Rs7,650/share.

K-Electric was the volume leader with 46.030 million shares, but lost Rs0.09 to end at Rs4.53/share, while Maple Leaf’s turnover was the lowest of the day with 5.443 million shares, while it shed Rs1.21 to end at Rs23.04/share.