KSE-100 Quarterly Review: Murphy’s law comes into effect

April 1, 2020 (MLN): The KSE-100 index lost nearly around 11,503 points during the first three months of the current year and closed at 29,231-mark on March 31, 2020, i.e. 28.24% lower as compared to December 31, 2019, wherein the index closed at 40,735 points.

The major driving force behind this fall in the value of the benchmark index is also responsible for bringing the stock markets across the globe to its knees. That’s right. The COVID-19 pandemic has spared no country, no economy, in fact, nothing on this planet from its wrath. Not just the global indices, but the forex markets, commodities, and mutual funds markets, to name a few, have also suffered considerably.

The first month was nothing less than a honeymoon period for the KSE-100 index, as it was delivering incessant victories and breaking several records back to back. The inflow of foreign funds via investments in T-bills, stability in PKR-USD exchange rate, curtailment of Current Account Deficit and enhancement in SBP’s foreign reserves helped the benchmark index successfully score a hat-trick for the month.

It may be relevant to mention that not everything was going perfect during January, as the escalating tensions between the United States and Iran had dented the well-being of the index temporarily. All in all, the combined impact of these forces had led to the KSE-100 gaining 895 points during the month.

On the contrary, the month of February was host to several hostile news for the domestic Stock market, which shifted investors into a frenzy mode. Multiple factors such as hotter than expected CPI readings for January and delays in the conclusion of the second IMF review dented investors’ confidence. Subsequently, the KSE-100 index lost around 3,647 points during the month.

Finally, the month of March saw the arrival of the COVID-19 into Pakistan, which spilled water on all the efforts and hardships by the Government to revive the economy. Several attempts by the Government to rebuild the confidence of investors, such as announcement of Rs. 1 trillion stimulus packages and the curtailment in Policy Rates by the State Bank of Pakistan, twice, helped in providing some respite to the faltering stock markets.

The sectors that suffered the most during the first quarter of 2020 include Commercial Banks, E&P Companies, Fertilizer and Power Generation Sectors, as they combinedly took away 8,275 points from the index. Commercial Banking Sector was the largest loss bearer during the period, as its losses amounted to 3,075 points.

Within these sectors, PPL (-953), OGDC (-925), HBL (-852), UBL (-641) and ENGRO (-537) incurred the largest losses. 

During the quarter, the index touched a high of 43,218 points on January 13, 2020, and a low of 27,228 on March 25, 2020.

The All-Share Market Index also suffered immensely during the period, as it slumped by $16.7 billion, from $50.4 billion at the beginning of the quarter to $33.7 billion by the end of it.

Foreign investors were mostly net sellers during the quarter as they dumped securities worth $138.2 million, with Foreign Corporate making the largest sale at $132.8 million.

On the contrary, local investors were net buyers, wherein Insurance Companies picked up securities worth, $113.6 million. This was followed by Banks/DFIs and Individuals, as they purchased securities worth $10.8 million and $4.2 million respectively.

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