KARACHI: Investors stampeded for exit in the outgoing week which saw the KSE-100 index sink by 1,084 points (2.83 per cent). Market experts said it represented the culmination of the worst quarter (September-December) in 10 years since the global market meltdown in 2008.

The index closed well below the 38,000 resistance level at 37,167 points, leaving investors in fear of another push that could see it tumble below the new physiological support level of 37,000.

In addition to the worries over a weak economy which sit on the investors’ mind, the deafening noise on the political front created panic during the week, resulting in intense volatility, low volume and an unstoppable bloodbath.

On the economic side, weak macro indicators; further fall of $591 million in the State Bank foreign exchange reserves; drop in international oil prices impacting heavyweight oil and gas exploration and production sector; no new inflows from friendly countries and a big question mark over negotiations with the International Monetary Fund for bailout package eroded investor confidence in the otherwise attractively valued local market.

The problems were confounded by joint investigation team probing money laundering submitted its report to the apex court on fake accounts that were allegedly used to launder Rs42 billion and the award of 7-year jail sentence to the former PM Nawaz Sharif. This was followed by the federal government placing 172 names, including those of former President Asif Ali Zardari and his son under the exit control list, which further charged the political atmosphere.

The rollover week also kept investors sidelined. Market also remained conscious of the Financial Action Task Force review due next month where the government is working to prepare a compliance report to save the country from falling into the black list.

For the 34th week in succession, foreign investors went on a selling spree, recording outflow of $1.1m during the outgoing week. Foreign sell-off was witnessed in fertiliser at $1.2m and commercial banks $1.2m. On the local front, mutual funds were net sellers of $6.2m worth equity, while banks bought shares of $4.6m and companies picked up stocks valued at $3.6m. In mutual funds, unit holders seemed to shift to money market funds from equity.

The volume during the week improved 5pc to 110m shares while value traded was higher by 6pc to $35.9m. Sector-wise, the worst performers were commercial banks that ate away 361 points, followed by oil and gas exploration companies shedding 230 points, cement 172 points and fertiliser 137 points. On the flip side, tobacco and pharmaceuticals offered the market some respite, recording collective gains of 102 points.

Among stocks, Oil and Gas Development Company decreased 4.4pc, Pakistan Petroleum 4.1pc, Mari Petroleum 4.8pc and Pakistan Oilfields 3.4pc. Other laggards were United Bank, down 117 points, Engro Corporation 101 points and Lucky Cement 87 points.

Going forward, investors are likely to remain cautious on the last session of the year on Monday on the back of political uncertainty as the ex-president Asif Zardari is due to appear in person in the Supreme Court.

As the year comes to a close, equities have produced a negative return of 8pc so far with foreign selling at $536m.

Market gurus expect the New Year buying by banks and mutual fuds to be delayed until the dust settles on the economic and political front.

Published in Dawn, December 30th, 2018