KSE-100 index loses 635 points on FATF worries
Summary
It was the week when the Budget 2021-22 presented on June 11 by Finance Minister Mr. Shaukat Tarin went in the Parliament for its pros and cons to be passed with additions, deletion or amendments at later stage. Such a debate will give the general public a review of the budget from all angles. However, it was stoutly defended by the Finance Minister and his team. Along with this the Financial Action Task Force (FATF) meeting from June 22-25 was an important to be watched by the investors as the fate of Pakistan to stay or taken out from ‘grey list’ was to be decided. Being the ‘roll over week’, had its importance for the investors. The three events build up pressure on the investors and we saw the market opt for ‘profit-taking’ and the market shed 635 points during the week.
The KSE-100 Index lost 1.3% WoW during the week to close below 48,000 level. The Index oscillated between 48,000 to 47,900 and finally dipped to 47,603.36 when it appear near the end of day around 4pm from news coming from FATF session that Pakistan might be retained in the grey list. The average volume too declined to 694 million from last week one billion mark. The market capitalization lost 41 billion to stand at Rs.8.317 trillion.
The stock market on Monday tumble under the pressure of roll-over week, worries about the outcome of FATF meeting of four days concluding on 25th June and Budget discussion in parliament. The positive news of $1.5 billion per year Saudi oil facility available gave strength to the market. The KSE-100 Index shed 226.15 points to close at 48,012.52. The market participation dipped to 839m shares.
On Tuesday, the strong resistance of 48,000 level was broken on pressure of roll over week along with report of deficit widening from $21.07 billion to $27.46 billion year-on-year in 11MFY21. Banking, cement, steel and E&P and power sector were under selling pressure. The KSE-100 Index lost 25.38 points to close at 47,987.14.
On Wednesday, the stock continued to trade lower in a directionless trading. Index shed 86.44 points to close at 47,900.70.
On Thursday, stocks manage to gain modestly by 61.84 points after three days of losses. The rupee, which was losing strength against dollar was comforted by slight gain in rupee value. The Index closed at 47,962.54.
Finally on Friday, the Index tumble by 359.18 points on final day of FATF meeting when it seemed Pakistan will be retained on ‘grey list’ as matter seemed to be politicized by Indian lobby and statement of Foreign Minister Shah Mahmood Qureshi. The Index closed at 47,603.36.
Participants/Activity
Foreigners were net seller $7.89m during the week; companies were buyer by $5.98m, Banks were buyer $12.85m; Mutual fund seller $7.35m; individuals net buyer $13.71m and Insurance were seller $12.83m.
Volume leaders during the were: Silk Bank 396m; WTL 388m; TPL 122m; Byco 87m; Pace 81m; KEL 66m; Hum Network 60m; PIBTL 46m; Fauji Food Ltd 43m; Azgard 33m; BOP 33m and Ghani Global Glass 24m. Participants: Company Av 415; Gainers 176; Losers 218 and Unchanged 21.
Triggers
-Reserves fall $331m. Total reserves $23.257 billion with SBP $10.106 billion and Banks $7.151 billion as on June 18, 2021.
-Pakistan gets $4.5 billion facility for oil, LNG imports.
– Steel bar crosses Rs.150,000 per tonne.
– Fauji Meat’s entry into Malaysia.
-SSGC suspends gas supply to non-export industries.
– $1.5 billion Saudi oil facility available now.
-IMF has shown ‘flexibility’ on demands.
-Power policy approved by CCI
– Rs.300m allocation approved by ECC. Setting up of border market in sight.
– Finance Minister explains IMF challenge.
– Dollar spikes on strong demand from importers
Conclusion
- Pakistan to stay on FATF grey list for another year. Islamabad needs to complete one remaining CFT-related item; deliver on seven new parallel action points. The news came after the closing of the market.
Raees Uddin Khan,
Research & Development Institute of Securities Management Research& Training (Pvt) Ltd,
Karachi.
Dated: June 26, 2021