PSX bleeds for second day; total post-poll losses top 3,000 points

KARACHI: The Pakistan Stock Exchange (PSX) was crushed by another panic-selling spree on Monday, posting its ninth-highest day-on-day (DoD) loss, as investors gasped for clarity on the country's political and economic stability, taking total post-election losses to 4.8% or over 3,000 points in just two days, dealers said.

The benchmark KSE-100 Shares Index lost 1,878 points to close at 61,065, down 2.98% from the previous close of 62,943 points on Friday.

During the intraday trade, the benchmark index plunged by 2,232.91 points or 3.55% to trade at 60,710 points.

Arif Habib Limited in a note said the KSE-100 index remained in negative territory for two consecutive trading days following the election, experiencing a cumulative decline of 3,079 or 4.8%.

"Furthermore, due to ongoing uncertainty surrounding the formation of the government following the election results, the KSE100 recorded its ninth highest DoD decline," the brokerage house said.

Samiullah Tariq, the head of research at Pak-Kuwait Investment Company, attributed the loss to the "uncertainty regarding the formation of the government".

On February 8, Pakistan conducted its 10th general elections with many Pakistan Tehreek-e-Insaf (PTI) backed independent candidates clinching victory.

Muhammad Sohail, CEO of Topline Securities, attributed the initial decline to the "unexpected" election results, which deviated from pre-poll expectations.

This uncertainty triggered a massive sell-off, with the benchmark KSE-100 index losing 3% at its lowest point.

Alpha Beta Core's Khurram Schehzad said the index continued its downward trajectory on the second-day post elections, largely due to uncertainty over the formation of the new government (a hung parliament) that could give some direction, clarity and outlook on handling pressing economic challenges facing the country ahead.

"In this regard, unlike the past trends, the KSE-100 index went down in the two consecutive sessions after the elections, where values at the PSX eroded sharply," Schehzad said.

Each session has posted a loss in market capitalisation of Rs214 billion ($767 million), with a cumulative loss in two sessions at Rs427 billion ($1.53 billion), according to Alpha Beta Core analyst.

"Historically, PSX showed jubilance post elections where the market used to go up 3 2% in the first two days post-elections (2008, 2013, 2018 elections), while this time around, the market has lost 4.7% post-elections."

According to Schehzad, the trend may continue with investor confidence losing further, however, the sooner a concrete decision is taken by the winning political parties with clarity on the economic team with a plan and direction towards addressing the key economic challenges, the market should stage a swift recovery.

Arif Habib Limited in a market wrap pointed out that Monday's loss had taken cumulative post-election declines to -4.88%.

"Only 3 stocks rose while 88 shares fell with OGDC PA (-7.5%), PPL PA (-7.5%), and MARI PA (-5.59%) emerging as the biggest contributors to index declines," the brokerage said.

Moreover, it said that MSCI would announce the results of the February 2024 Index Review later in the day which could be beneficial for Pakistan concerning passive flows at the end of the month, according to Arif Habib Limited.

"February again proves to be a seasonally weak period for Pakistan equities and until clarity on the political situation emerges bias remains to the downside," the brokerage said.