KARACHI: The Pakistan stock market made a sorry sight on Thursday as it turned out as a casualty of the dreaded coronavirus that is infecting people and markets across the globe.

The benchmark KSE-100 index opened in the red and could not step out in the green for the entire session. As nervous investors continued to dump shares and switch to dollar and gold, it plunged by 1,716.56 points (4.56 per cent) and closed at the current year’s lowest point of 35,956.69.

The value of shares eroded by Rs222bn, taking the four days’ decline in by Rs351bn. For the second trading day in the week, the market was brought to a halt as the capitalisation-based KSE-30 index fell 4pc and could not struggle out of it for the next five minutes.

Shares across the board succumbed to selling pressure with as many as 31 hitting their lower circuit breakers. Trading was suspended for 45 minutes at around 2:13pm when the KSE-30 index tanked 708 points (4.37pc) and stood at 16,221.

The mechanism has been devised to give the market a cooling period and provide opportunity for brokers to collect mark-to-market margins as a tool for risk management.

“PSX as a frontline regulator has introduced market halt action with approval of the Securities and Exchange Commision of Pakistan (SECP) in accordance with international best practices as a means to safeguard the interest of stakeholders,” the bourse said in a statement.

SECP Policy Board Chairman Khalid Mirza in a brief chat endorsed the halt in trading mechanism observing that it provides the market to regroup, calm investors who start thinking rationally. “When the market rises or falls due to external factors, it is better to halt trading as is provided in the new regulations,” he said.

The PSX tracked the rout in the global markets in the US, Europe and Asia. A spokesperson for the SECP, however, shared figures showing PSX doing better than most Asian bourses including India where Sensex eroded 8.18c.

Investors were concerned over the World Health Organisation describing the coronavirus outbreak as a pandemic for the first time. The persistent slide in international oil prices amid US ban on travel from Europe to US for a month stoked fears of global recession.

Former chairman of the bourse, Arif Habib, said that investors ignored the benefits of the falling international local prices on the economy as they were witnessing some outflow of money from treasury bills and were uncertain about the foreign investors going forward believing that the weakness of the rupee may force them to hold any planned fresh investments. The possible cut in interest rates by 100 basis points in the upcoming State Bank monetary policy statement was already priced in.

Foreigners sold shares worth $3.4m while among local participants, mutual funds also realised cash by disposing off $4.06m which traders said could be to meet redemptions. The volume increased by 6pc to 230.7m shares while traded value declined by 17pc to $62m. Stocks that contributed significantly included Bank of Punjab, Fauji Cement, Maple Leaf Cement, K-Electric and Pioneer Cement, which formed 38pc of total turnover.

Sectors contributing to the performance included banks, dipping by 527 points, exploration and production 237 points, fertiliser 234 points, cement 211 points, oil and gas marketing companies 102 points.

Shares that bore the brunt of selling were Habib Bank, down 6.82pc, Engro Corporation 6.19pc, Lucky Cement 6.84pc, Hub Power 4.44pc, Oil and Gas Development Company 4.96pc, MCB 4.12pc, Pakistan Petroleum 4.80pc, Fauji Fertiliser 3.90pc, United Bank 3.16pc and Pakistan Oilfields 5.76pc.

Published in Dawn, March 13th, 2020