State giants lift tumbling stocks!

• Stocks come down as ‘Azadi’ and ‘Inqilab’ marchers head towards Islamabad but state-owned institutions absorb the dip
• Analysts say state funds can support stocks up for at least one week

Pakistan Tehreek-e-Insaf (PTI) Chairman Imran Khan and Pakistan Awami Tehreek (PAT) Chairman Dr Tahirul Qadri may score some points on streets against Pakistan Muslim League-Nawaz (PML-N)-led government but not on the stocks market where “political appointees” sitting at the helm of affairs of state-owned listed companies have been entrusted with the task to offset any adverse impact of the prevailing political uncertainty created by ‘Azadi’ and ‘Inqilab’ marches on Islamabad.

As PTI and PAT marches kept the risk-averse investors at bay, analysts say that the state-owned institutions are all set to “support” the stocks market for at least the next one week-till the curtain falls on this political standoff.

THE FALL AND RISE:

The Karachi Stocks Market has marked a strong recovery – gaining some 846.35 points or 2.99 percent, accumulatively, during the last three trading sessions: 233.09 points on Tuesday, 201.06 points on Wednesday and 412.20 points on Friday.

The market capital has been static at Rs 6.6 trillion during these days. The KSE 100-share index recovered to 28,917.75 points from 28,071.41 points of Monday when panic gripped stocks, making the benchmark index nose-dive by record 1309.09 points (4.46 percent).

The one-day fall of more than 1,300 points, Mehanti said was an immediate reaction of the stocks investors to PAT’s decision to join PTI’s ‘Azadi’ march.

During the past three sessions, market observers cited “state-owned institutional support” for the unusual bullish trend on the otherwise “panic bound” market.

“Institutional interest remained in blue-chip stocks amid support from state-owned funds,” viewed Arif Habib Corporation Director Ahsan Mehanti.

WHERE DOES THE GOVT STAND?

Asked if the government is manipulating the stocks market Mehanti replied in the negative saying manipulation would be if they were giving a wrong view of the market.

“They are serving the nation and performing their duty to absorb the panic,” he said adding that the state-owned institutions are meant to support the market whenever political climate requires.

He said the same institutional support was seen in 1998 and 2008.

“Every five years this sort of support comes to the fore to stabilise the panicked market,” Mehanti added.

He, however, conceded that the heads of these state-owned companies were “political appointees under the law”.

WHO’S BEARING THE WEIGHT?:

“Pakistan State Oil (PSO) rallied amid institutional support to gain 2.5 percent,” said Topline analyst Samar Iqbal.

These state-owned firms, including State Life, National Investment Trust (NIT), Bank of Punjab (BoK), PSO, National Bank of Pakistan are liquid enough to stabilise the panicked market, said analysts.

“They have so far invested Rs 20 to 40 billion of liquidity that hardly forms 15 to 20 percent of their kitty,” Mehanti told Pakistan Today.

BoK has reportedly been topping the list in last three-day shares trading on the country’s largest bourse. The bank counted its traded shares at 18.8 million on Tuesday, 12.6 million on Wednesday and 9.9 million on Friday.