Political uncertainty leads to 330 points slump in KSE-100 Index

Shares at the Pakistan Stock Exchange tumbled after the benchmark KSE-100 Index registered a fall of 330.66 points on Monday – a negative start of the business week as political uncertainty grips the country.

The main reason behind this trend was the PTI’s announcement of dissolving the Punjab and Khyber Pakhtunkhwa assemblies on December 23 and the resultant maneuvering by the two rival political groups.

When trading came to an end, the KSE-100 index was at 40,970.82 points, down 0.8 percent. At one point, it had reached a low of 40.814.86 after dropping 486.53 points.

Since January 1, the index in down 8.13 percent while the decrease for the one-year period is 6.67 percent.

But it is not just continued political uncertainty as low foreign exchange reserves and no decision on the pending assistance from Saudi Arabia, which are sustaining and spreading negative sentiments.

According to First National Equities Limited Chief Executive Ali Malik said trading volumes were low because of both political and economic uncertainty. “There are huge discounts but the trust factor is at its lowest and people are not investing. However, there is no panic in the market,” he said.

Other fear a huge political crisis in case the two provincial legislatures are dissolved amid weak economic fundamentals and persisting shortage of dollars. The only way out, they say, is an agreement with another country for a bailout or conclusive talks with the International Monetary Fund (IMF).

At the same time, the State Bank of Pakistan’s foreign exchange reserves have declined by $11 billion during a year from $17.686 billion in December 2021 to the level of $6.7 billion on December 9.

When the session ended on Monday, the total volume of the KSE-100 Index stood at 82.41 million shares – a 21.56 percent increase against 64.64 million shares traded last week on Friday.

Shares of 88 companies were traded during the day, of which 65 recorded a fall, 22 registered an increase and one remain unchanged.

In terms of sectors, most of the negative contributors were power generation companies, fertilizer and technology which negatively contributed 153.12 points. However, miscellaneous closed the session positively, gaining 48.33 points.

When it comes to volume leaders, Bank Alfalah with 29.08 million shares followed by K-Electric 5.06 million, Unity Foods 3.92 million, Pakistan Petroleum 3.22 million and Cnergyico PK 3.12 million topped the list.

The stocks that emerged as net losers during the day included: Rafhan Maize Products 6.75 percent, Nestle 2.57 percent, Colgate-Palmolive 1.60 percent, Millat Tractors 4.48 percent and Mari Petroleum 0.82 percent.

On the other hand, the scrips which gained the most during the session were: Pakistan Services Limited 6.76 percent, Pakistan Tobacco Company 1.04 percent, Abbott Laboratories 1.47 percent, Packages Limited 1.30 percent and Highnoon Laboratories 0.41 percent.


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