KARACHI: Stung by disturbing events on the political front, stock market investors ran helter-skelter for cover during the past week.

The KSE-100 index sank 930 points (2.33 per cent) week-on-week to 39,080, which is the lowest closing in 74 weeks.

Trading started on a positive note on Monday, extending the earlier week’s celebration over the successful issue of eurobond and sukuk that fetched $2.5 billion. But the party did not last long as panic soon gripped investors on political uncertainty. The KSE-100 index also saw the 16-month low of 38,785 points in the middle of the week.

Sensing attractive valuations, foreigners gathered stocks worth $1.04 million during the week against a heavy outflow of $39.54m in the earlier week.

Among local participants, insurance companies were buyers of $6.4m worth of stocks while individuals were net sellers of shares valuing $9.7m.

The average volume during the week was up 8.74pc from the previous week to 141m shares.

Punters and even some value investors preferred to play with small-cap scrips where the volume leaders included WorldCall Telecom with 69m shares, K-Electric 58m shares, TRG Pakistan 53m shares, Japan Power Generation 43m shares and Azgard Nine 30m shares.

The value of traded shares declined 30pc to $53.5m.

AKD Securities stated that oil and gas regulator’s adamant stance about the implementation of the proposed tariff regime for gas utilities dragged Sui Northern Gas Pipelines (SNGP) and Sui Southern Gas Company (SSGC) down by over 12pc. Pakistan State Oil (PSO) and Kot Addu Power (Kapco) slid 7.26pc and 13.94pc, respectively.

Despite the negativity, Pak Suzuki rallied 4.4pc as the auto assembler announced the launch of four new products.

Arif Habib Ltd said sectors that topped the laggards’ list included banking, down 293 points, oil and gas marketing 195 points, power generation and distribution 149 points, cement 91 points and fertiliser 87 points.

Topline Securities stated that Habib Bank went down 4pc week-on-week, Kapco 14pc, SNGP 13pc, United Bank 4pc and PSO 7pc, erasing a total of 404 points from the index. Pakistan Petroleum gained 4pc, Nestle Pakistan 11pc, Pakistan Tobacco 6pc, National Foods 10pc and Dawood Hercules 2pc, cumulatively adding 188 points to the benchmark.

News highlights of the week included US Defence Secretary Jim Mattis acknowledging the efforts of Pakistan in the war on terror, the stock exchange proposing to widen the existing scrip-level circuit breakers to maximum 15pc, Sindh notifying an additional subsidy of Rs9.30 per kilogram on sugar exports, inflation reaching 3.97pc in November and foreign exchange reserves jumping to $21bn.

OUTLOOK: Developments on the political front with the formation of an alliance against the ruling party may further weaken investors’ confidence going forward, stated AKD Securities.

“On the international front, the Federal Open Market Committee meeting is scheduled on Dec 12 where its hawkish stance might create further pressure on the sustainability of the rupee-dollar parity at its current levels,” it said. Arif Habib Ltd predicted that equities could remain range-bound in the week ahead amid disturbance on the political front along with uncertainty over the timing of the rupee depreciation.

Pundits pointed out that the KSE-100 index was currently trading at a cheaper price-to-earnings (PE) multiple of 8.2 (2017 earnings), offering a higher dividend yield of 6.2pc, against the Asia-Pacific regional average PE multiple of 13.9 and the dividend yield of 2.4pc.

Published in Dawn, December 10th, 2017