LAHORE – Pakistan Stock Exchange tumbled as chatter of increase in gas prices by the new government were doing rounds during the trading session’s time. Though the news came in post market close (rumors of which prevailed earlier in the market), the govt in a bold step approved higher gas prices in ECC meeting. Resultantly, the index shed 400 points with chemical and fertilizer sectors (-75pts) taking the major hit.
Though the decision to raise gas prices is macro positive (as it will reduce fiscal deficit by 25-30bps), it will hurt corporate profits.
Out of the 49.4m shares traded in the said sectors, LOTCHEM remained in the limelight trading 23.7m shares closing -1.59% down, while DOL was down 5%. Other sectors that dragged down the index were cement and oil & gas exploration companies, chipping away 156pts from the market.
To note, market participation remained dull as investors continued to show concern on economic front. Resultantly traded volumes fell by 7% to 145.2m shares, while value traded was down by 22% to US$44mn.
Experts said that negativity prevailed at the local bourse as the KSE-100 index lost around 400 points to close at 40,520. Volumes remained subdued as 145m shares changed hands during the day. LOTCHEM (-1.59%) from the chemical sector led the volumes with more than 23mn shares exchanging hands. Most of the dull activity can be attributed to political uncertainty and lack of positive triggers.
On the political front, the Economic Coordination Committee (ECC) has accorded its approval to a proposed hike in gas tariff. A larger increase in tariffs was placed on higher volume slabs not to burden masses with the price hike. Moreover, almost three months after being placed on the Financial Action Task Force (FATF) grey list for failing to curb terror funding, Pakistan’s recent action against terror financing, particularly on the “legal” front, was found to be “unsatisfactory”, according to a review by the Asia Pacific Policy Group (APPG).
NPL (-3.53%) from the power sector declared its FY18 result, where the company posted an EPS of Rs9.07 and a cash payout of Rs1.50/share. Cement sector remained under the hammer, where major players such as MLCF (-4.92%), DGKC (-4.10%), LUCK (-2.48%) and PIOC (-5%) contributed -73 points to the declining market. Limited participation was witnessed in the banking space where UBL (-2.01%), HBL (-1.00%) and NBP (-1.00%) lost value to close in the red zone. Moving forward, investors have been recommended to trade cautiously and reduce short-term positions on strength due to lack of positive triggers that can potentially drive the market.