The Pakistan Stock Exchange has been retreating amid uncertain speculations by investors as the country’s delegation meets Financial Action Task Force (FATF) Working Group in Beijing for face-to-face talks and rising political noise between the political parties.
The benchmark KSE 100-share Index further dropped 390 points or 0.91pc and hit 42,357.13 points on Tuesday as of 12.04pm.
Yesterday, the Index closed at 42,747.63 after losing 420.14 points or 0.97 percent as negative sentiments prevailed among investors. A total of 173,897,330 shares were traded compared to the trade 211,406,865 shares during the previous day, whereas the value of shares traded during the day stood at Rs7.050 billion.
In the previous week, the market closed at 43,167.77 points, while observing fluctuations in the whole week, and closed in a little bit of negative territory amid political uncertainty that marred the overall trading environment while kept investors’ sentiment subdued.
Earlier, the signing of a phase one trade deal between the U.S. and China to ease the ongoing trade war restored a bit of confidence among the investors. Domestic politics and rising reservations against the ruling party by its allies were also noticed by the investors. On Friday, the Index opened at 43,093.16 points and the Index managed to close with gains of 102.67 points or 0.24 per cent at 43,167.77 as the stock market took investors on a roller- coaster ride on the last trading day of the week where the volatility intensified in the second session.
Traders had opined that the market was still in search of a direction, which could be provided by the State Bank monetary policy and the herald of corporate results reporting season next week. Traders were of the view that after a major run-up since August last year, the index was consolidating at the current levels before moving forward. “Early trade has been witnessing much of the volatility and the index has been fluctuating from negatives to positives and vice-versa.”
The emerging disapproval from Pakistan Tehreek-e-Insaf (PTI) allies over its policies contributed to the slow pace as the disagreements between the PTI government and its allies are being taken as a “sign of a brewing political crisis.” Two weeks ago, the market witnessed massive overall spike in the stocks as local and foreign investors rampaged across the market to quickly hit upper circuits after the war clouds hanging over the region due to US-Iran hostilities dissipated which provided the investors the much-needed comfort to move funds from gold and money market back to risky assets that may provide higher returns.
Earlier, investors’ optimism continued as they saw the market back in the green after two earlier dismal years of negative returns. From Aug 16, 2019 when the benchmark index had hit the pit at 28,765 points, the market has witnessed a spectacular rally that has carried it up by more than 50pc in fewer than five months.
Improvement on the external front together with stability in the Pakistani Rupee was expected to reassure foreign investors. Meanwhile, inflationary readings are set to touch peak in January 2020 (this month) with an imminent interest rate cut to follow, domestic investors remain jubilant as well, he said. Spot gold edged up to $1,566.71 per ounce, and back toward a seven-year peak of $1,610.90 reached last week.