KARACHI:
The stock market witnessed a torrid week as a series of undesirable events weighed heavily on the benchmark KSE-100 index, resulting in a decline of 703 points (2.1%) during the week ended May 15, according to local media sources.
The week started off on a disastrous note after reports emerged that market brokers were under investigation for insider trading and the situation did not improve much later in the week following a terrorist attack in Karachi, sources claimed.
Investors also chose to remain on the sidelines as more details about the budget for the next fiscal year emerged. A successful review of the International Monetary Fund’s programme and continued foreign buying also failed to encourage investors during the week, authorities stated.
The index dropped more than 1,000 points on Monday on rumours that the National Accountability Bureau (NAB) and the Securities and Exchange Commission of Pakistan (SECP) were teaming up to crack down on the brokers involved in insider trading.
The sharp drop prompted some value buying on Tuesday as investors jumped on the opportunity of buying shares at low prices, resulting in the KSE-100 recovering 517 points. The rebound also coincided with the MSCI adding Hub Power Company and Indus Motor Company to its Frontier Market Index.
However, the gains were short-lived as terrorism reared its ugly head in the city of Karachi. A sectarian attack left 45 people dead and created panic in the metropolis. Activity at the bourse slowed down as the nation mourned the loss of lives in the attack.
The index remained range bound for the remainder of the week with investors choosing to remain on the sidelines as news about the upcoming budget trickled in. The KSE-100 index ended the week with an overall drop of 703 points and closed at 33,039 points on Friday.
There were some positive news flow, but those failed to have any reasonable impact on the market. During the week, the IMF concluded its seventh review of the Extended Fund Facility and agreed to release the next tranche to Pakistan after determining that the country had met its performance criteria for the period.
Foreigners also continued to be net buyers and purchased equity worth $6.1 million as compared to net buying of $12.2 million in the previous week.
In sector-specific news, the oil and gas sector and the banking sector took a beating as crude oil prices and T-bill yields dropped during the course of the week. The cement sector also came under the spotlight towards the end of the week after South Africa announced penalties on Pakistani manufacturers in a dumping case.
Average trading volumes held steady and were recorded at 191 million shares per day. However, average daily values dropped 9.5% and stood at Rs9.75 billion. The Karachi Stock Exchange’s market capitalisation stood at Rs7.18 trillion ($70.5 billion) at the end of the week, authorities claimed.
