KARACHI: The shares market bled red on Monday because of rising commodity prices and increasing political temperature after Prime Minister Imran Khan’s no-holds-barred speech criticising the opposition as well as the European leadership.

As a result, the KSE-100 index lost 1,284.38 points or 2.88 per cent on a day-on-day basis to close at 43,266.97 points.

Speaking to Dawn, Topline Securities CEO Mohammed Sohail said the decline of less than 3pc in the benchmark index should be described as “panic selling” instead of a “bloodbath”.

“Although domestic politics is one of the two drivers of the latest fall in share values, I think the bigger reason is the rise in global energy prices. The market will stabilise as soon as normalcy returns to the international oil market,” he said.

Brent crude reached $139.13 a barrel — highest since July 2018 — before shares trading began on Monday.

The Russian-Ukraine war has rattled the global energy market with crude, coal and natural gas hovering at multi-year highs.

Mr Sohail said investors’ concerns about Pakistan’s status as a preferred supplier of textile products to the European Union are also misplaced. “It’s too early to say. They may be biased, but Europeans aren’t likely to move against Pakistan in such an ostensible manner,” he said.

Ismail Iqbal Securities Head of Research Fahad Rauf agreed with Mr Sohail’s assertion that the falling share prices are primarily a result of rising global energy prices.

“Selling was expected today given the sudden increase in oil prices. It’ll either produce inflation or widen the fiscal deficit if the government chooses to subsidise petroleum products,” he said.

The trading volume increased 75.7pc to 236.9 million shares while the traded value went up 73.4pc to $46.1m on a day-on-day basis.

Sectors that took away the highest number of points from the benchmark index included cement (235.18 points), commercial banking (222.09 points), technology and communication (159.14 points), fertiliser (97.76 points) and power generation and distribution (91.28 points).

Stocks contributing significantly to the traded volume included Hum Network Ltd (20.07m shares), WorldCall Telecom Ltd (11.54m shares), Flying Cement Ltd (11.43m shares), TRG Pakistan Ltd (9.51m shares) and TeleCard Ltd (9.02m shares).

Shares contributing positively to the index included National Foods Ltd (12.13 points), Adamjee Insurance Company Ltd (6.97 points), Dolmen City REIT (5.15 points), Pakistan Services Ltd (2.79 points) and HBL Growth Fund (2.45 points).

Stocks that took away the maximum number of points from the index included Lucky Cement Ltd (121.68 points), The Hub Power Company Ltd (79.01 points), TRG Pakistan Ltd (77.64 points), Systems Ltd (58.66 points) and Habib Bank Ltd (58.49 points).

Stocks recording the biggest declines in percentage terms on a day-on-day basis were Yousaf Weaving Mills Ltd (12.01pc), Azgard Nine Ltd (7.6pc), The Searle Company Ltd (7.49pc), Cherat Cement Company Ltd (7.47pc) and Unity Foods Ltd (7.47pc).

Foreign investors remained net sellers as they offloaded shares worth $0.91m.

NASIR JAMAL ADDS:

Some stock market analysts saw Prime Minister Imran Khan’s speech, lashing out at EU countries and asking them if they considered Islamabad their “slave”, as a major trigger for the market decline.

But according to Fahad Rauf, domestic political events do affect investor sentiments, but only for a very brief period.

“We have seen the PTI dharna in 2014 and the impact of the Panama Papers case [against former Prime Minister Nawaz Sharif] on the market. But fears of political volatility do not last for long and the market prices fluctuate in major events for only a couple of days. What drives the market up or down for longer periods are economic fundamentals.”

Published in Dawn, March 8th, 2022