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Bloodbath at PSX as KSE-100 Falls by Over 2100 Points [Updated]

The Pakistan Stock Exchange (PSX) saw a dramatic sell-off during the trading hours, with the benchmark KSE-100 index losing over 2,100 points in intraday trading.

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After opening trade at 45,369.14 points, the market showcased bearish sentiments, with the KSE-100 index losing over 2,100 points in the day.

According to Arif Habib Ltd, this is the largest day-to-day decline since COVID-19. At the end of the day, the KSE-100 index went down by 2,135 pts (4.71%) and was closed at 43,234 points. It is the 4th largest decline ever in terms of index points.

The Assistant Vice President at JS Global, Muhammad Waqas Ghani, told ProPakistani,

[The] Market has reacted negatively to the news of an alarmingly high import bill and a significant increase in the cut-off yields (an increment of 228bps) for three-month treasury bills in the recent auction. Reportedly, [the] provisional import bill for the month of November has clocked in around US$8bn, this may lead the trade deficit to rise to ~$5bn for the month. [The] Major share in imports is of Energy imports which were ~US$2.4bn (~US$9.5bn in 5MFY22). Due to this expanding trade deficit, further depreciation of [the] Pak-rupee can also not be ruled out, which would perpetuate pressures on inflation.

He added, “Higher than expected CPI reading of 11.5 percent for Nov-2021 has led to cut offs in the recent T-Bill auction to increase to 10.79 percent for the three month papers, an increase of 228bps over the yield of 8.5 percent offered in the previous auction held on Nov-17 pricing in expectations of beyond a 100bps increase in the upcoming Monetary Policy announcement this month.”

Notably, big-name analysts and experts have blamed the widening trade deficit and increasing inflation as the reasons for the massive plunge. The PSX drop is expected to pile a negative-vertical pressure on the Pakistani Rupee and propel interest rates to swell up simultaneously.

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Around 386.74 million shares were traded at the exchange, with 336 of the 366 active scrips declining in value, only 17 advancing and 13 remaining unchanged.

It should be noted that volumes increased from 241.7 million to 386.8 million shares (60.4% DoD). The traded value also increased by 52.4 percent to reach $79.7 million as opposed to $52.3 million.

Top Volumes

SCRIP PRICE HIGH LOW CHANGE VOLUME
WTL 2.01 2.25 1.95 -.18 33,019,000
DCR 11.70 12.2 11.46 -.3 29,583,500
BYCO 5.95 6.59 5.81 -.61 22,828,500
UNITY 23.47 25.5 23.46 -1.89 17,735,140
GTECH 11.55 12.75 11.2 -.45 17,584,000
MLCF 34.39 36 34.39 -2.78 16,139,894
ASL 14.02 15.1 13.95 -1.06 13,212,500

Trade Deficit and Inflation Are Hurting the Local Bourse

The local bourse is putting on a harrowing display of bearish signals on the back of news that Pakistan’s trade deficit widened by 162.4 percent during November, owing to an almost threefold increase in imports compared to exports.

As per PBS figures, inflation increased to 11.5 percent from 9.2 percent, the largest increase in the preceding 20 months, owing to a record spike in fuel costs in October. Import-led inflation was fueled by the significant rupee devaluation. Inflation, as measured by the Consumer Price Index (CPI), reached its highest level in 20 months, during which time global oil prices continued to rise gradually, eroding previous gains.

In extension, a rise in T-bill rates at Wednesday’s auction indicates that the State Bank of Pakistan will continue to tighten monetary policy in its upcoming monetary policy announcement on December 14, 2021.

More or less, the market anticipates that imports for the previous month would reach an all-time high of roughly $8 billion, widening the current account deficit even more and piling even more pressure on the stock exchange.

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