Stocks shed 634 points in noisy week
Bears ruled the roost at the stock market in the outgoing week knocking off the KSE-100 index by 634 points (1.6pc) with closing seen at 40,164. Investor participation remained weak due to lack of trading interest as the growing noise on the political front kept the market nervous.
The constant threat of a breakout of the second wave of Covid-19 and its consequences on economy, already seen by the country in March, also spooked investors. Other negatives that kept the investors away included the uncertainty over the Financial Action Task Force (FATF).
The Asia Pacific Group (AGP) - a regional affiliate of the FATF - kept Pakistan on its enhanced follow-up list based on the country's performance until February. Out of the total 40, Pakistan was stated to be largely compliant on eight, partially compliant with twenty-eight, and non-compliant with four FATF recommendations. The final decision of the meeting would be announced on October 21-22.
Moreover, higher-thanexpected numbers for September inflation, which put a question mark on the State Bank of Pakistan's policy rate going forward was a dampener on investor sentiments.
The only silver lining was the start of the corporate results season with financial sector turning out to the harbinger of good news with a couple of banks and investment companies coming up with splendid financial figures. Foreigners known to shun uncertainties continued to ditch stocks. In the outgoing week, they sold shares worth $2.7 million. The outflow was mainly seen in exploration and production sector at $2.8m and cement $0.8m.
Among local participants, banks/DFIs stood out as major buyers of shares valued at $7.6m followed by the insurance companies $2.4m. Average daily traded value of shares plunged 24pc over the previous week to $61m while the average daily traded volumes declined 29pc week-onweek to 296m shares.
Other key developments during the week were remittances remaining at above the $2 billion level for the fourth consecutive month in September, representing growth of 31pc year on year. The increase however remained a subject of debate regarding how much of it represented severance packages of employees as loss of jobs in the UAE was high. Foreign exchange reserves held by the SBP fell for the fourth week on account of debt servicing that rose to $11.8bn. The International Monetary Fund forecasts 1pc growth in FY21 for Pakistan, which also worried economists.
According to Arif Habib Ltd, sector-wise negative contributions came from oil and gas exploration companies, down 21 points, cement 116 points, power generation and distribution, oil and gas marketing companies 56 points and technology and communication 51 points.
On the other hand, positive contributions were led by chemical, up 16 points and commercial banks 10 points. Scrip-wise, top negative contributors were Hub Power that lost 69 points; Pakistan Petroleum 68 points and Oil Gas Development Company down 63 points.