KARACHI – Investors’ fears of rising political uncertainty and foreign selling made the Karachi Stock Exchange (KSE) tumble even further than other regional stocks on Friday.
Analysts believe that factors, like the PML-N’s expected announcement on parting ways with the PPP-led coalition government in Punjab and an expected upsurge in oil prices on the back of Middle Eastern unrest shattered the investors’ confidence at the local bourse. The KSE-100 benchmark dwindled 315.74 points or 2.74 percent to close at, what the analysts say, six-month low of 11,223.52 points as the investors resorted to panic selling owing to political uncertainty and expected worsening of Middle East crisis leading to rise in international oil prices.
“Panic selling was seen in the earnings announcement session as the investors fear foreign selling on unrest in Middle East and Libya after global capital markets close at record lows,” said Arif Habib Investments Director Ahsan Mehanti.
The index board was painted red early in the morning when the KSE-100 index tumbled by more than 230 points. Turnover at the ready-counter was calculated at 156.838 million shares against the previous 80.203 million.
The intraday high and low were recorded, respectively, at 11,561.53 and 11,102.08 points with analysts seeing the KSE-100 benchmark hitting a six-month low since August 16 last year.
Market capitalisation closed at over Rs 3.037 trillion, compared to Rs 3.120 trillion a day earlier. While gainers and losers numbered 97 and 254 during last trading day of the week. Lotte Pakistan PTA remained the volume leader after seeing 37.646 million of its shares traded during the day. However, it could not avoid crisis and sustained a per share loss of 99 paisa. Political uprising in Libya and fears for its spread, throughout the oil-producing Middle East, jacked up global oil prices by $2.0 to $ 113 per barrel on Friday.
This fell heavily on foreign and local investors at Karachi Stock Exchange who put their holdings to sale apprehending a further rise in fuel prices and the resultant hike in inflation and interest rate. According to InvestCap Research, foreign portfolio investment at Karachi stocks was minus $3.05 million on Friday, while $5.4 million was pulled out during the whole week.
The Brent oil prices were recorded at $111.4 per barrel against $115 of Thursday, while per barrel oil price stayed $97 on the day. The apparent ease in oil prices was perhaps because of supply assurances from the oil-rich Saudi Arabia if any disturbance took place in Libya. Analysts are convinced that Friday’s bearish activity was partly driven by political uncertainty besides other factors.
“Rising political uncertainty as government alliance with PML-N broke in Punjab affected the sentiment,” said Ashan Mehanti. He said that investors remained cautious throughout the trading session on concerns for rising fiscal deficit and political reservation for rising local POL prices despite Brent crude cross $ 120 Thursday.
Pakistani stocks are said to have tumbled the most throughout Asia with the blue-chip scrips like Oil and Gas Development Company, Pakistan Petroleum Limited and Pakistan Oilfields Limited hitting their lowest levels in months.
Another analyst Hasnain Asghar Ali of Aziz Fidahusein and Company said the fierce sell-off eroded massive valuations at the KSE. “Bears were in total control right from the word go, the syndicate of participants operating from both local and off-shore accounts stayed the major sellers,” he said.
