Pakistani stocks ended 3.98 per cent lower on Friday at a more than four-month low, as foreign investors offloaded their holdings amid a global sell-off, while local investors remained cautious, dealers said.
The Karachi Stock Exchange’s benchmark 100-share index closed 3.98 per cent, or 471.07 points, lower at 11,375.09, its lowest close since March 21, on turnover of 113.17 million shares.
“The fresh pressure on the KSE is coming from the regional and global sell-off and as it is, the local bourse was already fragile because of the security situation,” said Sajid Bhanji, director at Arif Habib Ltd. Officials say more than 300 people were killed in Karachi in July alone — one of the deadliest months in almost 20 years. Some officials say about 200 killings may have been targeted — linked to victims’ ethnic or religious affiliations. “The market is likely to remain under pressure in the coming days,” said Bhanji. The market shed 6.7 per cent this week. European shares plunged to 14-month lows on Friday after a steep sell-off in global markets on growing concerns the US economy could be heading towards another recession and on jitters the euro zone debt crisis could spread to Italy and Spain as well.
Dealers said that upcoming strong corporate announcements also may do little do boost investor sentiment.
“Though the corporate earnings in Pakistan will post above average growth, depleting market depth may cause market volatility in case foreigners tried to dump shares to reduce their exposure to frontier and emerging markets,” said Farhan Mahmood, analyst at Topline Securities. “This was the same trend that was observed today.” In the currency market, the rupee was flat amid a lack of activity in the market but dealers expect the local unit to stay under pressure for now.
The rupee closed at 86.20/25 to the dollar, unchanged from Thursday’s close. It hit a record low of 86.83 on Monday.
Dealers said dollar payments are typically higher in July and August because of stronger oil demand and debt payments. They also said there were fears of portfolio outflows which could cause the rupee to further weaken.
Dealers said increased remittances from Pakistanis working abroad had supported the rupee and shielding the currency from a sharp fall in recent weeks, but the increased dollar demand over the last week pushed the rupee lower. According to official data, remittances rose to a record $11.2 billion in the 2010/11 fiscal year, an increase of 25.77 per cent from the previous year. In the money market, overnight rates ended lower at between 13.00 per cent and 13.25 per cent, compared with Thursday’s close of 13.40 per cent after the State Bank of Pakistan injected 86.75 billion rupees ($1 billion) worth of government paper in a seven-day reverse repo.
Global sell-off sparks 3.98pc drop at KSE
