KARACHI: The Pakistan stock market went into a free-fall for the third successive week, when the benchmark KSE-100 index tanked 1,971 points (4.5 per cent), which turned out to the biggest weekly loss in 2018.

The extensively criticised utterances by the former prime minister during the weekend rocked the boat of equity market as it accounted for more than half of the week’s loss — index having bled 1,096 points (2.5pc) on the first day of trading (Monday) after it bore the brunt of the blow of Nawaz Sharif’s suicidal statement, eventually settling at 41,624 points.

Market gurus also said that since the current political set-up hangs by a thread as its five-year mandate ends on May 31, the depressing closing of the outgoing week also legitimised a technical correction of the index as heated political atmosphere remained the key concern for market.

Investors worries were exacerbated by the depleting foreign exchange reserves, incessant foreign selling of local equities as well as the 2018 semi-annual review by MSCI which remained a non-event with Pakistan’s weight in the emerging markets index witnessing no change.Investor participation remained abysmally low as both individuals and institutions remained sidelined due to the absence of any positive triggers and shortened trading hours on the advent of Ramazan. During the week, the trading volume rolled back by 31pc over the earlier week to 115 million shares while the average daily traded value fell 22pc to $44m.The week also saw one of the worst days in regard to investor participation when the traded value sank to 46-month low on Thursday.

Foreigners were net sellers of $20m worth stocks during the week, almost five times their sell-off in the preceding week. Among the local participants, banks absorbed all of the $20.2m equity sold by the foreign investors while mutual funds were net sellers of shares valued at $16.8m.

Sector-wise selling was led by commercial banks, amid foreign selling, cement, decreasing by 304 points, fertiliser 273 points, exploration and production companies 229 points and oil and gas marketing companies 134 points. The major laggards among scrips were Lucky Cement, lower by 167 points, Habib Bank 118 points, Engro Corporation 117 points, Pakistan Petroleum 94 points and Nestle 87 points.

Key news flow included the passage of Finance Bill 2018-19 by the National Assembly, $8.5 billion jump in country’s external debt and liabilities to reach $91.76bn in 9MFY18 while the State Bank of Pakistan’s reserves plunged 3.26pc to $10.8bn, and foreign direct investments increased 2.4pc to $2.24bn in 10 months.

Historically, the Pakistan stock market performance during previous caretaker set-ups, on average, has given a positive return of 14pc which raises hopes for the index under the new upcoming interim government which is expected to take office on June 1.However, the key events to track, going forward, would be the announcement of general elections’ date and the selection of the interim Prime Minister.

Published in Dawn, May 20th, 2018