KARACHI: Extending the loss of nine per cent in last two weeks, stocks drifted further south on Monday with the KSE-100 index closing down by 750.36 points (2pc) at 36,767.57. Stocks continued to bleed as investors were on a selling spree to cut losses, on concerns over the economy.

While the foreign investors have sold equity worth $356 million year-to-date, local participants have been able to absorb much of the foreign sell-off. The biggest market participant, mutual funds, has not displayed panic. UBL Funds CEO Yasir Qadri confirmed that there was no run for redemptions on mutual funds and most were sitting on ample cash, picking up stocks in measured amounts.

Contrary to the small individual investors who were spooked by further fall of market, some senior analysts were holding out optimism, Intermarket Securities Director Raza Jafri believes that much of the bad news has been priced in and the bounce back is not far away. He admitted that more economic pains could be expected but since the market works in anticipation, those would have already been factored in as the stocks were now trading below the seven-times multiple.

One of the major fear that has come to haunt investors is the probability of Pakistan being eased out of the MSCI emerging market index in the semi-annual review in November. “It is quite possible that the removal may turn out to be a blessing, since international active funds could swoop to buy those stocks at current attractive levels,” reasoned several analysts. JS Research wrote in its report: “Stocks highly oversold; yet economic headwinds restricting a relief rally.”

Major decliners were MCB, down 3.86pc, Pakistan Petroleum 2.70pc, Engro Corporation 2.52pc, Bank Al Habib 3.78pc and Lucky Cement 3.85pc, cumulatively taking away 256 points.

Published in Dawn, October 16th, 2018