Political turmoil had a significant negative impact on equity markets on Tuesday, driving the value of listed shares down to a 12-year low.
On account of rising political and economic problems, market capitalisation in dollars declined nearly five per cent on a day-on-day basis to $30.7 billion — the lowest level seen since June 2010, according to Topline Securities.
Arif Habib Ltd. said that investors continued their selling momentum from the previous day across the board owing to the unrest on the political front and the devaluation of the rupee, which reached historic lows in the interbank and open markets.
As a result, the KSE-100 index settled at 40,389.07 points, down 978.04 points or 2.36pc from the previous day. The index shed 708 points in the week’s first trading session on Monday.
The trading volume increased 28.8pc to 194.9 million shares while the traded value went up 32.7pc to $26.1m compared to the previous day.
Mubashir Anis, AVP at JS Global, stated that the primary catalyst for the decline in stock prices is the increasing political instability. He went on to say that investors are concerned that political developments will interfere with the IMF loan program and other multilateral payments that are expected to come through afterwards. He emphasized that the foundation of listed companies is strong and that some businesses who depend on imports may be more exposed to sudden fluctuations in the exchange rate; however, this does not validate the widespread selling we are seeing in the market.
Mr. Anis noted that the market needs clarity on the IMF program and the general macroeconomic picture to ease fears and take advantage of attractive valuations.
Stocks contributing significantly to the traded volume included K-Electric Ltd (19.62m shares), WorldCall Telecom Ltd (17.67m shares), Cnergyico PK Ltd (9.96m shares), Cordoba Logistics and Ventures Ltd (7.94m shares) and Unity Foods Ltd (7.47m shares).
Sectors that took away the highest number of points from the benchmark index included commercial banking (236.12 points), oil and gas exploration (139.97 points), fertiliser (131.05 points), cement (99.93 points) and power generation and distribution (57.26 points).
Shares contributing most negatively to the index included Meezan Bank Ltd (60.73 points), Engro Corporation Ltd (58.11 points), the Hub Power Company Ltd (56.44 points), Pakistan Petroleum Ltd (47.81 points) and Habib Bank Ltd (43.47 points).
Stocks that contributed most positively to the index included Packages Ltd (3.55 points), Nestle Pakistan Ltd (2.14 points), Abbott Laboratories Pakistan Ltd (1.99 points), Kot Addu Power Company Ltd (1.27 points) and First Habib Modaraba (0.82 points).
Foreign investors were net buyers as they purchased shares worth $1.26m. On the local front, mutual funds and insurance companies sold shares worth $3.17m and $1.39m, respectively.