Stocks plunge amid deepening political crisis

KARACHI: Stocks plunged almost 3 percent in a broad sell-off on Monday as steaming political tensions spooked investors and added to heightened concerns over slowing already fragile economic recovery, dealers said.

Pakistan Stock Exchange's (PSX) benchmark KSE-100 Shares Index was hit by a whacking 1,250.06 points or 2.77 percent loss to go reeling down to 43,902.05 points after touching a top of 45,152.11 and a bottom of 43,821.31 points during the session.

Zafar Moti, a former director of PSX, said investors were in close contact with each other since yesterday betting the market would open down and that’s exactly what happened. By the end of the day the index had broken the 44,000 points level, which he said was bad news.

Moti said capital markets react similarly to such events worldwide, but the political crisis was not the only worry as other seriously demoralising reports were also doing rounds in the bourse.

One of those was that in the upcoming monetary policy committee meeting, the central bank’s interest rate was likely to be raised to double digits, said the former PSX director. “Who would deal with petrol and diesel prices and the gas crisis? Overall, the economy will be the first casualty of this situation and the capital markets the second, so to speak.”

“We neither have a strong GDP nor do we have enough reserves to give us a reason to not to go to the IMF. The question is who is going to negotiate with the IMF now?” he said. KSE-30 Shares Index also decreased 501.58 points or 2.91 percent to 16,736.71 points compared.

Traded volume dropped 219 million shares to 170.48 million from 389.11 million, while trading value decreased to Rs5.497 billion from Rs11.107 billion. Market capital narrowed to Rs7.415 trillion from Rs7.599 trillion. Out of 305 companies active in the session, 26 closed in the green, 268 in the red, while 11 remained unchanged.

Ali Najib at Topline Securities said equities bled big time as the new twist in the political tug-of-war that raised concerns over the continuation of current economic measures. “During the trading hours, investors opted to offload their positions amid deepening political crises,” Najib said.

Cement, banks, technology, and OMCs (oil marketing companies) contributed negatively to the benchmark index. LUCK, HBL, TRG, PSO, and MEBL lost 367 points, cumulatively, whereas COLG, HIGHNOON, and ATLH together added 34 points to the benchmark index.

Colgate Palmolive was the best performer of the day. It rose Rs99.98 to Rs2,299.99 per share. The top second gainer was Otsuka Pak, which jumped Rs17.01 to Rs244.70/share. SapphireTextile led the losers by falling Rs75.01 to Rs933.51/share. It was closely trailed by Sapphire Fiber that shed Rs66.79 to settle down at Rs830/share.

Analyst Ahsan Mehanti at Air Habib Corp said stocks fell across the board as a new turn in the political crisis sent investors worrying over the economic future of the country. Rupee instability, slump in global crude oil prices, political noise, current account deficit, and higher import bills destroyed the gains to bring the market down by nearly three percent, Mehanti added.

Telecard Limited topped the volume chart with 17.39 million shares, trailed by K-Electric Ltd with 16.01 million shares. Stocks that recorded significant turnover included TPL Properties, Ghani Global Holding, WorldCall Telecom, TRG Pak Ltd, Maple Leaf, Agritech Limited, Avanceon Ltd, and Ghani Global Glass.