Bloodbath at Pakistan stock market as benchmark index sheds over 2,100 points

KARACHI: The Pakistan Stock Exchange (PSX) witnessed a bloodbath session on Thursday as benchmark KSE-100 index nosedived by more than 4.7 percent and the country’s national currency hit a new all-time low against the backdrop of soaring trade deficit, inflation, interest and rates of treasury bills, said traders and analysts.
The bourse resumed its trading session in the morning on a negative note, making an intra-day low of 2,282 points as investors remained concerned about the increasing trade deficit and higher-than-expected secondary market yields.
The benchmark KSE-100 index shed 2,134.99 points and closed at 43,234, according to the PSX data.
“The Pakistan market went down by more than 2,000 points, or over four percent, due to the shocking November, 2021, import bill and abnormal increase in the T-bill yield in yesterday’s auction,” Muhammad Sohail, chief executive officer of Topline Securities, commented.
The Pakistani rupee also hit another all-time low on Thursday and closed at Rs176.42 against the US dollar by shedding its value by 0.53 percent.
“The rupee has further lost its value due to the widening trade deficit amid swelling import bill,” Abdul Azeem, head of research at Spectrum Securities, told Arab News.
The equity market posted one of the largest declines in the current year, according to analysts.
“On March 16, 2020, the index recorded its steepest drop of 2,376 points,” Khurram Schehzad, chief executive officer of Alpha Beta Core, recalled. “The decline of 2,134 points during a single session today made the investors lose about $1.9 billion.”
According to Arif Habib Limited, a Karachi-based brokerage house, investors were worried due to the highest ever monthly trade deficit of $5.1 billion recorded in November, as exports stood at $2.9 billion against an import bill of $8 billion.
The expectation of higher interest rate in the upcoming monetary policy also impacted the market sentiment, as the three-months cut-off yield of treasury bills increased by 229 basis points to 10.79 percent.
Similarly, the yield of six and 12 months reached 11.50 and 11.51 percent.
“Stocks closed at a record low due to the concern over a sharp increase in T-bills along with the Pakistan Investment Bond,” said Ahsan Mehanti, chief executive of Arif Habib Corporation.
Analysts said the expectation of higher inflation numbers in the upcoming months due to the low base effect and further devaluation of the rupee also triggered selling pressure at the bourse.
The sectors contributing to the performance of the stock market lost their value significantly. Due to massive selling trend, the volumes increased from 241.7 million shares to 386.8 million shares. The traded value also increased by 52.4 percent to $79.7 million as against $52.3 million.
Equity market analysts said the stock exchange was likely to remain volatile in the coming days.