Stocks crash as economic worries grip investors

KARACHI: Stocks on Thursday recorded their worst single-day fall in more than 20 months, with investors stuck in a selling frenzy over economic fallout from ballooning trade deficit and scares of another rate hike, dealers said.

“It was a ‘Black Thursday’ for the country’s capital market that suffered its third largest one-day loss ever,” a dealer said.

With a loss of 2, thcb stock price or 4.71 percent, benchmark KSE-100 Shares Index plunged to 43,234.15 points at Pakistan Stock Exchange (PSX), testing a day high and a low of 45,369.14 and 43,089.07 points, respectively.

Kura Schehzad, chief executive officer at Alpha Beta Core, said the decline of 2,135 points, the largest fall in the calendar of 2021, caused about $1.9 billion losses to investors.

“Among other reasons for this decline are massive November import bill and surprising increase in the secondary market interest rates under the IMF (International Monetary Fund) programme,” It was the third-largest decline in a session, Schehzad said.

Analysts said expectation of further monetary tightening and an expected all-time high current account deficit sparked panic selling across the board.

Zafar Moti, former director PSX, said capital market suffered a massive tragedy.

“There were talks about mini-budget and FBR (Federal Board of Revenue) chairman also gave a statement on it. Besides, T-bill options and concerns

ahead of next monetary policy meeting, seen increasing discount rate by above 125 basis points, affected the sentiment,” he added.

“Lower locks mechanism kicked in and the whole market was about to be closed for an hour but some scrips survived.”

Corp, said, stocks closed record lower on concerns over a sharp rise in T-bill and PIBs (Pakistan Investment Bonds) yields, $32.851 trade deficit for Jul-November 2021 widening by 68.6 percent, weak global equities, and slump in global crude oil prices.

“Rupee instability, NEPRA approval of hike in power tariff,

uncertainty ahead of approval over terms of resumed IMF programme contributed to record fall.”

In line with the overall bearish trend, KSE-30 Shares Index also dropped 877.90 points or 4.99 percent to 16,697.96 points.

Traded shares, however, increased 145 million shares to 386.75 million shares from 241.06 million shares, while trading value rose to Rs14.06 billion from Rs9.22 billion. Market capital decreased to Rs7.418 trillion from Rs7.750 trillion. Out of 365 companies active in the session, 16 posted gains, 338 losses, while 11 remained unchanged.

Brokerage Topline Securities in a note said equities suffered a massive bloodbath during the session.

The market opened on a negative note making an intraday low of 2,282 points as investors were concerned over multiple things like soaring trade deficit and higher than expected secondary market yields, the brokerage said.