Stocks succumb to FATF uncertainty

Stocks fell on Friday as investors took no chances hours ahead of anti-money laundering and terror financing watchdog’s verdict on Pakistan’s grey list status, dealers said.

The Pakistan Stock Exchange's (PSX) benchmark KSE-100 Share Index lost 359.18 points or 0.75 percent to close at 47,603.36 points, hitting a day high of 48,040.10 points and a low of 47,475.81 points.

Syed Atif Zafar at Topline Securities said FATF (Financial Action Task Force) later in the day maintained Pakistan in its grey list.

“Pakistan has made progress on two of the three remaining action plans, resulting in Pakistan largely addressing 26 out of 27 action plans.”

However, FATF in its press conference highlighted money laundering risks were still high in Pakistan and a new action plan would be discussed with Islamabad with respect to money laundering, Zafar said.

“Now, Pakistan will not only need to largely address the remaining 1/27 action plan, but also the new action plan related to money laundering,” he said.

“After the technical completion of these action plans, Pakistan will need to successfully complete two on-sites for delisting from the grey list.”

“The next plenary is expected in October 2021, where we believe Pakistan will continue to be on the grey list, because of the inclusion of the new action plan – dampening hopes of an near-term exit from the grey list,” the Topline Securities analyst.

KSE-30 Shares Index also shed 184.92 points or 0.96 percent to close at 19,113.68 points.

Investor interest was mainly witnessed in cements and financial sector, where CHCC, LUCK, UBL and HBL were the major gainers.

Turnover, however, increased 123 million shares to 761.42 million against 638.84 million shares.

Trading value rose to Rs21.74 billion against Rs16.37 billion. Market capital dropped to 8.316 trillion from 8.358 trillion. Out of 402 companies’ active in the session, 155 closed in green, 229 in red, while 18 remained neutral.

Analyst Ahsan Mehanti at Arif Habib Corp said stocks closed lower on uncertainty over FATF decision on Pakistan action plan and exit from grey list and MSCI consultation over downgrade to frontier market status by September 7 this year.

He said institutional support remained on higher global crude oil prices and rupee stability.

Impact of senate approval for 10 percent power surcharge on industrial power tariff and reports of $632 million current account deficit in May 2021 were the major sentiment dampners.

Pak Services, rising Rs58.14 to Rs900 per share, and Nestle Pakistan, growing Rs55 to Rs5,815 per share were the top two gainers of the day.

Sapphire Textile, falling Rs37.50 to Rs872.50 per share, followed by Abbott Lab, losing Rs27.56 to Rs752.44 per share were the worst performers of the day.

Brokerage Arif Habib Ltd in a report said, “Through various bills and amendments, the government had diligently worked to satisfy the FATF”.

Those related to laws against money laundering, freezing of assets and filing of cases against proscribed organisations, and all of this was reflected in the APG’s report, published earlier this month, the brokerage said.

WorldCall Telecom, Byco Petroleum, Pace (Pak) Ltd, TPL Corp Ltd, K-Electric Ltd, Hum Network, Silk Bank Ltd, Azgard Nine, Ghani Glo Hol and Ghani Global Glass were the most traded stocks of the day.

WorldCall Telecom was the volume leader with 142.17 million shares, followed by Byco Petroleum posting 53.80 million shares.

Turnover in the future contracts increased to 354.06 million shares from 259.19 million shares on Thursday.