As coronavirus panic takes hold in country, Pakistan Stock Exchange on Monday traded in a bearish trend, with the benchmark KSE-100 Index recording its biggest fall in a single day since 2009.
Dropping below the 34,000 mark, the KSE-100 Index lost 2,441.98 points, or 6.77pc, to touch its intraday low at 33,618.90. The sudden plunge at the start of the session caused yet another 45-minute ‘market halt’ which is fourth in the last six trading sessions. As trading resumed, the index failed to find any positive triggers and settled lower by 2,375.97 points at 33,684.91.
The panic selling following the COVID-19 outbreak worldwide has dented the global economy including Pakistan, which was the main reason behind the huge drop. Furthermore, the emergency rate cut of 100 bps by US Federal Reserve has created more anxiety among the investors, who have grown furious over the fiscal condition and capacity of the US government.
Among other indices, the KMI-30 Index lost 3,890.87 points to end at 52,017.17, while the KSE All Share Index dropped 1,424.74 points, closing at 23,867.22. Of the total traded shares, 18 advanced and 289 declined.
BMA Capital Management Senior Vice President Irfan Saeed said the free-fall of KSE-100 is primarily due to a plunge in the global markets, as even globally coordinated policy measures have failed to stem panic-stricken investor fears of ensuing recession as a result of COVID-19. He said the sharp rise in coronavirus cases in Pakistan in particular has fuel to fire. He said monetary policy announcement by State Bank of Pakistan will set the guiding principles for the future course of the market, as it is expected that the central bank will cut its policy rate to add stimulus to the economy.
At KSE-100 sector-wise, the index was let down by commercial banks with 689 points, oil and gas exploration companies with 326 points, fertilizer with 281 points, cement with 220 points and power generation and distribution with 155 points. Among companies, the most points taken off the index was by Habib Bank Limited, which stripped the index of 169 points followed by Engro with 140 points, Hub Power Company Limited with 126 points, Muslim Commercial Bank with 124 points and United Bank Limited with 115 points.
In global market, Wall Street has seen a blood bath as rate cut by US Fed failed to breathe certainty into the market and coronavirus continued to rattle the investor sentiment. US stocks fell sharply, with the Dow falling to its lowest level in nearly three years. Worries mounted that central banks’ emergency measures over the weekend meant the economy is in much worse shape than previously believed. Investors also bailed out of stocks despite a massive intervention by the US Federal Reserve. The central bank said it would purchase another $700 billion worth of treasury bonds and mortgage-backed securities.
Instead of soothing the markets, another emergency interest rate cut from the Federal Reserve had the opposite effect. Stocks tripped a circuit breaker at the New York open, with the S&P 500 falling more than 7%. Trading was halted for 15 minutes. The Dow was 8.3%, or 1,920 points, lower. The Dow hasn’t been this low since May 2017. The Nasdaq Composite dropped 7.8%. There are now more than 3,000 cases of the novel coronavirus in the United States, according to government agencies and the CDC.
In Asia, stocks in Asia Pacific tumbled. Mainland Chinese stocks dropped on the day, with Shanghai composite 3.4% lower at about 2,789.25 while the Shenzhen composite slipped 4.834% to approximately 1,712.02. Hong Kong’s Hang Seng index also fell 4.03%, as of its final hour of trading. In Japan, Nikkei 225 closed 2.46% lower at 17,002.04. South Korea’s Kospi slipped 3.19% to close at 1,714.86.
