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PSX drops more 400 points as virus continues to demotivate investors

PSX drops more 400 points as virus continues to demotivate investors

KARACHI: Panic and uncertainty continues to demotivate potential investors on Tuesday at the Pakistan Stock Exchange (PSX) as the benchmark KSE-100 Share Index further lost 421.68 points or 1.08pc in the early trading hours and reached 38,722.05 (below 39,000). As of 11.34am, the apex of the day remained 39,247.75 whereas 38,693.02, the lowest so far.

The latest bearish trend in the stock market followed reports that Pakistan has kept sealed its borders with Iran for the third day after it was plagued by several cases of deadly COVID-19 (coronavirus).

Yesterday, the KSE-100 Index closed below the 40,000 support level for the second time in the current year at 39,143.73. It opened at 39,039.03 today.

On Monday, a massive sum of Rs175 billion was wiped off the market capitalisation in a single day, and the foreigners sold shares worth $3 million.

Experts opined that global fund managers have been selling off equities across Southeast Asia, and so Pakistan has been also taking an impact. Stock markets across Asia, including Japan, Singapore, Korea, Thailand, Jakarta and India, also saw a sharp plunge.

Meanwhile, investors dumped stocks and ran to seek the shelter of safe havens where gold hit its all-time high price, in concert with the hefty rise in value of the yellow metal in world markets.

In the previous week of Pakistan, the market struggled for its sustainability as confusion and uncertainty surrounded potential investors until Friday when the FATF maintained Pakistan’s status in its grey list of countries with inadequate controls to restrict money laundering and terror financing.

Among other persisting factors were the large suspension of imports from China, which had been hammering the stock market, and strife political disagreements between coalition parties in the government until some of them were settled in meetings with the ruling PTI.

On a positive note, investors were relieved as the prime minister announced no change in gas and electricity prices until at least the next budget against rumours of an earlier increase. Moreover, the foreign exchange reserves continued to rise for the 20th week, crossing the $12.5bn mark.

Further, the approval of IMF’s third tranche and ban imposition by the government on export of essential food items so as to control rising inflation along with deferment of hikes in utility rates till Jun 2020 is also expected to impact the market trend.