KARACHI: The Karachi Stock Exchange’s (KSE) benchmark 100-share index came crashing down by 705 points on Monday, with Rs123 billion wiped off market capitalisation.

The index, which tumbled for the ninth session in a row, settled at a two-month low of 32,255 points. To the disappointment of investors in equities, the loss of 2.14 per cent on Monday washed away almost all the remaining 2.6pc return that the market had provided since the beginning of the year.

“So we are back to square one with a zero return after keeping money in high-risk stock investment for a whole year,” sulked one dejected stock investor.

Foreign selling intensified on Monday amounting to $8.17m, taking the year-to-date outflow at $280.9m.

Zubair Ghulamhusain, head of equities at Foundation Securities, observed that foreign funds were setting the tone of the market. Panic selling was triggered by local investors who were spooked by unstoppable foreign outflows.

Several analysts asserted that the local bourse has suffered the spillover impact of foreign investors’ heavy sell-off in the emerging and frontier markets, which had taken a turnaround on fear of US interest rise.

Nasim Beg, vice chairman of MCB-Arif Habib Savings, observed that although some of the macro numbers looked nice, the farm income which drives consumer demand was on a slide due to low commodity prices, especially of oil which had taken a toll on the heavyweight oil and gas sector.

He said that banking sector was also under threat “as its honeymoon with the PIBs (Pakistan Investment Bonds) was all but over”.

The KSE-100 index had represented decline of 6pc during November alone. “Based on the analysis of data for 13 eligible years out of 14, we can safely assume that December has a 92.3pc chance of closing in red (regression analysis points towards -2.5pc returns during the month),” calculated analysts at Intermarket Securities.

Dealers at several brokerages said that strict regulation enforcement over retail investors and confession by a former federal minister of petroleum to terrorism and corruption-related accusations also hammered down the index.

Published in Dawn, December 1st, 2015