Underperforming regional stocks a hurdle for Pakistan

After a weeklong decline, investors at the Karachi stock market – now Pakistan Stock Exchange will be searching for a rebound, but the best gains may not be at home as investors will take cues from regional outlook.

All the three stock exchanges in the country will transform into Pakistan Stock Exchange from Monday.

Analysts said a fall in oil prices to their 13 years lowest levels and china currency and stocks rout have only increased the overall gloom.

"All eyes would be on global markets and movements in crude oil prices...if they recover, the local bourse would recover too," said Muhammad Sohail, chief executive officer, Topline Securities. “Also, the investors would closely monitor foreign investors for cues.”

 Foreign funds offloaded their holding all over the world last week including Karachi Stock Exchange. Foreign portfolio managers sold shares worth $11.25 million in a week in Pakistan.

“The rout in global markets, a consistent foreign selling, uncertainty infused by ongoing investigation (against a local brokerage house) have raised question on likely bottom of the market,” KASB Securities said in its weekly market comments. “While there are not many data scheduled in the next week, the advent of earnings season for the quarter ended December 31, 2015 may divert attention away from the major negative developments in the outgoing week.”

KASB Securities investors are expected to adopt a cautious approach next week and take a cue from macro developments, Chinese equity market and oil price direction.

Arif Habib Limited said investors anxiously await the earning season, but lack of impetus may keep the market in pressure. "We expect the ever-changing global scenario to provide triggers to the local bourse, though any broad downward adjustment in the market shall be conceived as an opportunity to accumulate fundamentally strong stocks," it said.

Analysts said the increase in volatility and uncertainty the market had seen throughout the week because of China crisis hopefully coming to an end.

Karachi stocks market was down 2.08 percent at the end of first week of 2016. Trade volumes and value increased by 5.4 percent and 15.6 percent, respectively, to 119.8 million shares and $72.6 million on weekly basis. The market capitalisation declined by 1.95 percent to Rs6.88 trillion.