The Pakistan Stock Exchange (PSX) tumbled over 1,000 points on Monday as shock waves reverberating through the global equity markets impacted the local bourse as well. Geopolitical tensions continued to heighten following the killing of top Iranian military commander Qassem Soleimani in Baghdad by the US in a drone strike on Friday. The development created a war-like situation in the region as major world leaders called for restraint and calm to stabilise the highly volatile conditions.
In reaction, the benchmark KSE-100 index of the PSX plunged from the moment trading began and kept trading in the red throughout the day. Rising uncertainty sparked panic selling by investors, which pushed the index lower. Arif Habib Limited Head of Research Samiullah Tariq said that the major reason behind the fall was regional tensions and growing conflict between Iran and the US. Regional tensions pose a risk to Pakistan’s economy and politics as well, hence, investors have started offloading stocks, he said.
Next Capital Managing Director Muzammil Aslam said growing tensions led the stock markets around the world to fall and Pakistan’s bourse followed the trend. Major stock markets around the world were trading at a loss of 2.5-3% and hence tensions also reflected in the PSX, he said.
At close, the benchmark KSE 100-share Index recorded a decrease of 1,027.06 points, or 2.43%, to settle at 41,296.24. The bourse crashed and lost 1,027 points in a single day on Monday as the heightened regional tensions between Iran and the US spooked the investors, stated Aba Ali Habib in its report. Tensions between Tehran and Washington escalated to dangerous levels over the weekend after Iran’s top military commander was killed in a US airstrike in Baghdad late last week. Pakistan asked both the countries to exercise restraint and avoid further escalation in the conflict.
Meanwhile, global stocks sell-off and climbing oil prices fuelled safe-haven buying in gold, it said. Sector-wise, the oil sector remained active throughout the session despite an increase of 2% in international oil futures. Among major oil stocks, Mari Petroleum lost Rs27.32 in its share value, followed by Attock Petroleum (Rs9.39), Shell Pakistan (Rs9.63), PSO (Rs6.86) and Pakistan Oilfields (Rs5.27). JS Global analyst Maaz Mulla said that the carnage was witnessed at the local bourse as the KSE-100 index lost 1,027 points to close at 41,296 level (down 2.4%). “This pressure in the market was on the back of news that US and Iran exchanged threats of targeting installations and assets of each other after the killing of Iran’s military commander Qasem Soleimani in a US drone attack in Baghdad last Friday. However, likely redemptions in mutual funds may have played their part.
ENGRO (-3.9%), LUCK (-4.0%), HUBC (-3.1%), PPL (-2.2%), MCB (-1.8%) and BAHL (-2.6%) were among major laggards which dragged the index down.”
Overall market came under the hammering belt as investors opted to reduce positions where cements, steel and pharma were on the receiving end. DGKC (-5.0%), PIOC (-5.0%), MLCF (-5.3%), CHCC (-5.0%), LUCK (-4.0%), ASTL (-5.0%), ISL (-4.9%), SEARL (-5.0%), FEROZ (-5.0%) and GLAXO (-3.8%) were major laggards of the mentioned sectors. However, we expect market will remain volatile and choppy in short-term due to geopolitical uncertainty, he added.
Overall, trading volumes fell to 266.6 million shares compared with Friday’s tally of 322.9 million. The value of shares traded during the day was Rs10.5 billion.
Shares of 359 companies were traded. At the end of the day, 28 stocks closed higher, 325 declined and six remained unchanged. K-Electric Limited was the volume leader with 46 million shares, losing Rs0.09 to close at Rs4.53. It was followed by Unity Foods with 17.6 million shares, losing Re1 to close at Rs15.59 and The Bank of Punjab with 16.9 million shares, losing Rs0.37 to close at Rs11.48. Foreign institutional investors were net buyers of Rs311.5 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.