PSX experiences bloodbath, sheds 819.55 points in intra-day trading

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KARACHI:    The Pakistan Stock Exchange (PSX) has been experiencing a bloodbath on Monday following a spike in new coronavirus cases that refuelled investor anxiety about China’s disease outbreak.
The continuous dull and drab activity with bulls and bears managing to secure an upper hand in turns amid absence of several other triggers pushed the benchmark KSE-100 Share Index level below 40,000 after massive drop of 819.55 points or 2.04pc.
As of 11.24am, the Index reached 39,429.67 adopting a negative trajectory for the latest session. The market opened at 40,238.25. The apex of the day remained 40,249.22 (the previous close on Friday) and 39,425.56, the lowest so far.
In the previous week, the market struggled for its sustainability as confusion and uncertainty surrounded potential investors until Friday when the FATF maintained Pakistan’s status in its grey list of countries with inadequate controls to restrict money laundering and terror financing. These concerns together with uncontrollable spread of coronavirus that has adversely affected the Asian economy, in particular, have restricted the stock market to grow.
Among other persisting factors were the large suspension of imports from China, which had been hammering the stock market, and strife political disagreements between coalition parties in the government until some of them were settled in meetings with the ruling PTI.
On a positive note, investors were relieved as the prime minister announced no change in gas and electricity prices until at least the next budget against rumours of an earlier increase. Moreover, the foreign exchange reserves continued to rise for the 20th week, crossing the $12.5bn mark.
Going forward, market gurus expected the bourse to trade sideways to positive as they react to the Friday decision of the FATF review. Further, the approval of IMF’s third tranche and ban imposition by the government on export of essential food items so as to control rising inflation along with deferment of hikes in utility rates till Jun’20 is also expected to impact the market trend.
Investors may also be encouraged by the improvement in macroeconomic indicators such as the current account deficit shrinking by 72pc in 7MFY20. The market may also take cue from the developments such as the planned visit of China’s president to Pakistan and the conclusion of the US-Taliban peace talks.
Since mid-January, investors have been adopting extremely cautious behaviour after more headlines cover mounting deaths due to coronavirus taking full hold, a plunge in global crude oil prices, unchanged main policy rate by the State Bank of Pakistan at 13.25 percent for the next two months and political uncertainty in the country.
The SBP in the latest monetary policy statement kept the interest rate unaltered and pushed selling in the leveraged sectors such as cement and steel. Concerns over higher than expected reading of inflationary pressures and political uncertainty sparked by coalition partners of the government also kept investors away from the market.