Home Business Stocks slump over poll result delay | The Express Tribune

Stocks slump over poll result delay | The Express Tribune

Stocks slump over poll result delay | The Express Tribune



Pakistan Stock Exchange (PSX) was rattled on Friday by the unusual delay in announcement of election results and growing political uncertainty, which led to a plunge of 1,200 points in the KSE-100 index and deterred investors from building their portfolios.

Uncertainty gripped the market as initial, unofficial results of general elections trickled in, which were not in line with some pre-poll surveys and predictions.

In the morning, soon after trading began, the index plunged rapidly, losing more than 2,000 points in the first few minutes. However, the market quickly recovered and recouped more than half of the losses before midday.

In a major development, Moody’s Investors Service asserted that timely announcement of election results, leading to a smooth formation of a new government, would reduce political uncertainty, which was crucial for the country that was facing very challenging macroeconomic conditions.

Later, the central bank reported that its foreign currency reserves decreased by $173 million to $8.04 billion due to debt repayments.

Despite making a significant recovery, following some clarity about the outcome of elections, the KSE-100 index ended the day with heavy losses.

“Stocks fell across the board on political uncertainty amid delay in general election results,” said Arif Habib Corp MD Ahsan Mehanti.

“Moody’s rating concerns over political instability, policy uncertainty for a country facing challenging macroeconomic conditions, fragile balance of payments and high inflation remain the key driving factors. Investor concerns over surging industrial power tariffs also impacted sentiment,” he said.

Overleveraged positions and high leverage costs played the role of catalysts in bearish close of the market, Mehanti added.

At close, the benchmark KSE-100 index recorded a loss of 1,200.12 points, or 1.87%, and settled at 62,943.75.

Topline Securities, in its commentary, remarked that the market reacted negatively to delayed results of general elections where initial announcements showed no clear majority for a single party.

“The KSE-100 index declined to the intra-day low of 2,362 points (down 3.68%),” it said.


PSX plunges 3.68% after ‘election upset’

However, some recovery was observed as the day progressed and results started pouring in where the number of seats won by the PML-N increased and the probability of a coalition government emerged.

Major contribution to the index’s slump came from Oil and Gas Development Company, Pakistan Petroleum, Engro Corporation, Engro Fertilisers and Hub Power as they shed value, pulling the market down by 366 points, Topline added.

Arif Habib Limited (AHL), in its report, noted that the end of a shortened, but very eventful week saw the KSE-100 remain flat week-on-week.

Only eight stocks rose on Friday while 77 fell with Oil and Gas Development Co (-3.71%), Pakistan Petroleum (-3.7%) and Engro Corporation (-2.37%) being the biggest drags on the index, it said.

“Election results, which kept dominating the news flow, will be the key driver for the market next week,” it predicted.

Despite -1.9% day-on-day close following delay in election results, “price action did not break the structure and remained within the converging trend lines”, AHL added.

JS Global analyst Mohammed Waqar Iqbal stated that the KSE-100 index experienced a decline of 1,200 points, concluding the day at 62,944.

Trading session began with a 2,000-point drop due to delay in the announcement of election results, he pointed out. A volume of 258 million shares was recorded where K-Electric (-4.3%), Oil and Gas Development Co (-3.7%), Pakistan Petroleum (-3.7%), Pakistan Refinery (-3.7%) and Worldcall Telecom (-4.5%) were the volume leaders, the analyst added.

Overall trading volumes decreased to 258.1 million shares against Wednesday’s tally of 327.6 million. The value of shares traded during the day was Rs12.5 billion.

Shares of 319 companies were traded. Of these, 55 stocks closed higher, 241 dropped and 23 remained unchanged.

K-Electric was the volume leader with trading in 20.5 million shares, losing Rs0.21 to close at Rs4.65. It was followed by Oil and Gas Development Co with 18.9 million shares, losing Rs5.59 to close at Rs145.08 and Pakistan Petroleum with 17.9 million shares, losing Rs4.49 to close at Rs116.78.

Foreign investors were net buyers of shares worth Rs607.3 million, according to the NCCPL.

Published in The Express Tribune, February 10th, 2024.

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