KARACHI: The stock market remains in search of positive triggers on Monday as not much progression could be seen at the benchmark KSE-100 Share Index that dropped 142.98 points or 0.36pc as of 11.19am. The Index reached 40,100.28 as potential investors continue to react to the impact of the coronavirus outbreak hurting imports and other factors. The Index opened at 40,251.26 today, and closed at 40,243.26 on Friday.
In the previous week, the market kept struggling for its sustainability when confusion and uncertainty surrounded investors until late Friday when the IMF, in its concluding remarks affirmed that Pakistan had been successful in completing the “structural benchmarks” as well as in meeting “all end-December performance criteria” which had been set for the implementation of $6 billion Extended Fund Facility programme.
Other persisting factors, in particular the FATF concerns and large suspension of imports from China, which had been hammering the stock market. Besides, strife political disagreements between coalition parties in the government until some of them were settled in meetings with the ruling PTI.
Altogether, the Pakistan Stock Exchange’s (PSX) KSE 100-Share Index obtained only 99.63 points on a weekly basis.
Since mid-January, investors have been adopting extremely cautious behaviour after more headlines cover mounting deaths due to coronavirus taking full hold, a plunge in global crude oil prices, unchanged main policy rate by the State Bank of Pakistan at 13.25 percent for the next two months, uncertain FATF’s decision and political uncertainty in the country.
The SBP in the latest monetary policy statement kept the interest rate unaltered and pushed selling in the leveraged sectors such as cement and steel. Concerns over higher than expected reading of inflationary pressures and political uncertainty sparked by coalition partners of the government also kept investors away from the market.
Moreover, the outcome of the FATF in the review happening currently in Paris remained unclear, but analysts opined that Pakistan might escape black list, but remain in grey list for another three or six months. Several reports claimed that the substantial progress was made to pull the country out of the grey list, but Minister for Economic Affairs Hammad Azhar noted it was premature to speculate on any outcome.
They were also spooked by uncertainty over the decision by the Financial Action Task Force (FATF) on Pakistan status to be decided this month and the country’s ability to pull itself out of the grey list. Investors were also rattled over the inflation figures for January which came out at an alarming 12-year high of 14.6pc.
Some traders and businessmen in Pakistan said that loading of goods in China has come to a halt. Most industries that depend on raw materials imported from China usually build stocks to last them through the holiday closure, but in some cases at least those stocks are now running low and businesses are left wondering when normal imports might resume.