Shares at PSX routed after country goes into lockdown over virus threat

Updated March 24, 2020

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When markets closed at 4pm today, the benchmark index stood at 28,564 – down 2,102 points or 6.86pc for the day. The large-cap KSE-30 closed over 7pc down (1,010 points) at 12,527. – AP/File Photo
When markets closed at 4pm today, the benchmark index stood at 28,564 – down 2,102 points or 6.86pc for the day. The large-cap KSE-30 closed over 7pc down (1,010 points) at 12,527. – AP/File Photo

The Pakistan Stock Exchange opened for trading two hours late at 11:30am on Tuesday, a day after the army was called in to impose a country-wide lockdown to curb the spread of the novel coronavirus which has affected over 900 people since the country's first case on Feb 26.

But as soon as trading began, all hell broke loose as panicked investors rushed for the exit: The benchmark KSE-100 index plunged 1,826 points by 11:37am, just seven minutes into the opening bell. By that time, the KSE-30 index had shed 928 points, diving close to 7pc and trigerring a halt in trading for 90 minutes.

The late market open today was among a host of unprecedented measures put in place by the Securities and Exchanges Commission of Pakistan (SECP) to ensure "continuity of business operations" in view of the lockdown situation and the "remote access arrangements".

Among the special rules adopted, the commission revised thresholds for trading halt in individual stocks – from 7.5pc to 5pc – and for a wider market halt from 5pc tp 3pc based on the large cap KSE-30 index.

Before today, a trading halt in the market was trigerred for 45 minutes if the KSE-30 moved around 5pc or more in any direction for a period of five minutes. Beginning today, that circuit breaker was lowered to 3pc, trigerring a trading halt for 90 minutes.

After trading resumed around 1:42pm, the market continued its downward trajectory, though at a slower pace than witnessed in the brief morning session.

When markets closed at 4pm today, the benchmark index stood at 28,564 – down 2,102 points or 6.86pc for the day. The large-cap KSE-30 closed over 7pc down (1,010 points) at 12,527.

Speaking to Dawn.com, Deputy Head of Research at AKD Securities Ali Asghar Poonawala said that in the absence of any concrete policy actions, persistent demand shocks from provincial government mandated closure of business, transport networks and supply chain stresses have pushed bearish expectations, particularly regarding revenues and profitability, leading the benchmark index down 7pc for the day.

"At today’s close of 28,564 points, the KSE-100 index has lost approximately 30 per cent during the current year, with approximately 25.5pc of the decline taking place since Feb 26, when the first cases of coronavirus positive individuals were reported," he explained.

Poonawala said that today's close left the market just 112 points shy of its 52-week low of 28,452 points, marking a continuation of a fundamental bearish trend, as investors grapple with the economic implications of a prolonged, mandatory "lockdown".

"The prime minister's planned economic package is unlikely to assuage markets as relief is likely to be focused on providing a social safety net to the poor, while any concessions are expected to be limited in nature (considering the GoP’s fiscal limitations)," he said.

Nightmarish spell

Today's hammering comes on the back of a nightmarish last week for the stock market which saw the KSE-100 index sink by 5,393 points, representing the heaviest point-wise fall in the history.

It also translated into the weekly plunge of 15pc, recording the largest in terms of percentage since the global financial crisis of December 2008. The benchmark index had closed at 30,667 on Friday.

Pakistani market also became a casualty to the fast spreading coronavirus with confirmed cases rising by the day. Panic-stricken investors stampeded almost throughout the week to dump stocks and seek shelter of safer bets in fixed income securities.

Investors also were keeping track of the steps taken by the authorities to avoid social contact among individuals. They wondered if the lockdown of government and other offices in major cities would reflect upon the industrial and commercial economy.