KARACHI: The Supreme Court’s verdict in the Panama Papers case breathed new life into the stock market on Thursday as investors’ worst fears — prime minister’s disqualification — didn’t come true.
After slight hesitation, Pakistan Stock Exchange’s benchmark 100-share index got off to a storming start on Thursday, extending the massive rally seen a day ago.
Investors, however, remained between hope and fear on Thursday, until moments after the judges pronounced the first few words of the verdict past 2pm. The announcement set in motion a massive surge in the KSE-100 index, which cracked through the ceiling to mark another milestone of achieving the highest-ever intraday gains of 1,906 points (or 3.85 per cent) to touch 49,509 points.
Some fear jitters may linger as war is far from over
Just a day before, the index notched the biggest-ever intraday swing of 1,668 points. As excited investors began lapping up stocks that they could lay their hands on, all of the trading board turned deep green.
The volume of shares traded surged 54pc over the previous day to 408 million shares while trading value jumped 68pc to Rs25.7 billion.
As many as 116 stocks closed at their upper circuit, representing the maximum permissible rise of 5pc in a single trading session. By contrast, only 13 shares closed at their lower limit.
With the initial euphoria over, some cooling was seen before the close of the market with the index finishing off at 48,744 points on slightly pared gains of 1,140 points, or 2.4pc.
In the past 12 weeks, the uncertainty surrounding the Panama Papers case had taken its toll on the market. The KSE-100 index, which touched an all-time high of 50,887 points (intraday) on Jan 27, sank to 46,048 points on April 19, posting a loss of 4,839 points, or 9.5pc.
The investors were relieved over the end to this uncertainty and over the fact that their worst fears of an abrupt political upheaval did not materialise as the Supreme Court removed the prospects of an immediate disqualification of Prime Minister Nawaz Sharif. Instead, the court ordered further investigation into corruption charges.
“It’s a balanced decision,” said Mohammad Fawad Khan, executive director research at BMA Capital. However, he said the final verdict split 3-2 among the five-judge bench and deadline for the completion of a joint investigation team has the potential of carrying forward the overhang.
According to Intermarket Securities, major contribution came from Habib Bank which rose 3.33pc, Hub Power Company 4.51pc, United Bank 2.8pc, Engro Corporation 3.3pc and Fauji Fertiliser Company 3.52pc, which collectively added 364 points to the index. On the flip side, National Bank of Pakistan fell 1pc, Shifa International Hospitals Ltd 2.54pc and K-Electric 0.73pc.
From the sector perspective, industrials rose 3.66pc, utilities 3.12pc and materials edged up by 2.77pc.
Optimists at the market hope that investors will now focus on the ongoing results season, the upcoming budget due in the fourth week of May and the much-hyped formal reclassification of Pakistan into the MSCI’s emerging-market index in mid-May.
But detractors reflecting on the post-judgement reaction by political parties caution that the battle may have ended, but the war is far from over.
Published in Dawn, April 21st, 2017