Pakistan equities witnessed a panic-struck selling spree during the early hours of trade on Monday amid a severe economic crisis that has intensified since the new government came to power.
Pakistan’s stock market fell to its lowest level since December 2020 after fuel prices were left unchanged over the weekend.
The benchmark KSE-100 Index appeared bearish from the opening bell and immediately dropped into the red zone after shedding 1,111 points during the first hour of intraday trade.
The KSE-100 index initially opened on a negative note and stayed in a red zone throughout the day. At the end of the day, KSE-100 was closed at 42,667 points, down by 819 points or 1.88 percent.
The Chief Executive Officer of investment firm Alpha Beta Core, Khurram Schehzad, told ProPakistani,
PSX is down by about 1,000 points because of uncertainty surrounding the IMF program due to no adjustment in oil prices. The market expected the government to take a firm step over the weekend. Falling short of expectations, the government needs to move fast and take the markets and investors into confidence for future plans, otherwise, the outcomes could be scary. For instance, international rating agencies could soon downgrade their ratings for Pakistan’s economic indicators, potentially impacting its global bonds, interest rates, and debt-taking ability.
The investors opted to offload their position after the government decided to maintain fuel subsidies “for now”, defaulting on an overriding pre-condition set by the International Monetary Fund (IMF) for the resumption of its loan program.
The forex market has also remained under pressure with PKR/USD closing at 194.18 in the interbank today. Commenting on the mortifying development, the CEO of Topline Securities, Mohammed Sohail, tweeted, “No Change in Oil Price. One wrong decision. Many Costs; PKR against USD all-time low of 194.18 (Last 5 year worst for PKR), PSX down 2% today to reach 17 Months low (PSX worth USD36bn today vs peak of USD100bn in 2017), TBill all-time high 15.12% (Rate up 4.5% in 3 months)”.
No Change in Oil Price. One wrong decision. Many Costs; PKR against USD all-time low of 194.18 (Last 5 year worst for PKR), PSX down 2% today to reach 17 Months low (PSX worth USD36bn today vs peak of USD100bn in 2017), TBill all time high 15.12% (Rate up 4.5% in 3 months)
— Mohammed Sohail (@sohailkarachi) May 16, 2022
The global lender had made the withdrawal of petroleum and electricity subsidies a condition for resuming its bailout program. Pakistan is expected to meet with the IMF mission in Doha on Wednesday for the next round of discussions to restart the loan program. If granted, the expected influx will help Pakistan close the gap in its foreign exchange reserves and strengthen its balance of payments.
Overall market volumes appreciated from 208.09 million shares in the last session to 250.28 million shares. The highest volumes were witnessed in Lotte Chemical Pakistan Limited (LOTCHEM +4.10%), Pakistan Refinery Limited (PRL -3.70%), and Cynergyico PK Limited (CNERGY -5.10%). The scrips had 18.14 million shares, 18.07 million shares and 14.17 million shares traded, respectively.
Around 250 million shares were traded at the exchange, with 269 of the 351 active scrips declining in value, only 67 advancing and 15 remaining unchanged.
According to Capital Stake, the sectors dragging the benchmark KSE 100 index lower included the Banking sector (175.31 pts), the Cement sector (127.24 pts) and Technology and Communication sector (111.24 pts). Company-wise, Systems Limited (SYS 73.85 pts), Lucky Cement Limited (LUCK 61.74 pts) and Meezan Bank Limited (MEBL 49.59 pts) chipped off most points from the index.
The Technology and Communication sector lost 4.21% in its cumulative market capitalization. TRG Pakistan Limited (TRG 2.98%), NetSol Technologies Limited (NETSOL 1.29%) and Systems Limited (SYS 5.05%) all closed in red.
Over the weekend the Government of Pakistan decided to keep petrol prices unchanged at Rs. 149.86 for the fortnight. The government is to bear a price differential claim of Rs. 47.02/ ltr. The breakup of Petrol Prices showed that the Base price increased by Rs. 17.42 to Rs. 184.37. Retailer & Freight Costs remained constant at Rs. 12.51. While Taxation remained zero.