The KSE-100 index lost 1,066 points in the week to Oct. 9 and closed at 167,089, as geopolitical tension outweighed good news from the IMF, Dawn reported. That is a weekly fall of 0.6 percent, according to Arif Habib Limited. Brent crude stayed above $100 a barrel, which added to the pressure.
Why the KSE-100 fell
Analysts at AKD Securities pointed to rising tension in the region. Houthi attacks on shipping and on Saudi civilian and energy sites unsettled investors. In addition, Ukrainian drone strikes on Russian refineries and worries about US energy supplies kept oil prices high.
Rising bond yields also hurt sentiment. They fed talk of a possible interest rate rise. Concerns about a wider trade deficit and inflation added to the caution. Average daily volume fell 18.6 percent to 427 million shares, while average traded value slipped 2 percent to $67 million.
Banks and fertilizer shares lead the drop
Banks were the biggest drag, taking 566 points off the index. Fertilizer companies cut 234 points. Automobile assemblers, cement and textile composite firms also fell. Habib Bank, MCB Bank and United Bank together cost the index 388 points.
Not every sector lost ground. Oil marketing companies added 110 points, and power companies added 36. Pakistan State Oil was the single largest contributor, with a gain of 113 points. Hub Power, Pakistan Oilfields, Engro Holdings and Mari Energies also supported the market.
IMF deal fails to lift the market
The staff-level agreement with the IMF on the fourth review of the Extended Fund Facility and the third review of the Resilience and Sustainability Facility cleared the way for $1.2 billion. The IMF Board still has to approve it. Wire Examiner covered the agreement on Friday. Even so, the news could not offset the wider worries.
Other numbers to watch
Foreign exchange reserves held by the State Bank rose $15 million to $21.5 billion as of Oct. 2. The rupee gained 0.03 percent and closed at Rs277 to the dollar. Meanwhile, petrol rose 2.1 percent to Rs398.96 a liter, as we reported earlier. Diesel fell 0.9 percent to Rs395.72.
The government raised Rs381 billion at its latest debt auction against a Rs350 billion target. Yields rose on three, five and ten-year papers. The market now trades at 7.5 times earnings, with a dividend yield of 6.7 percent.
Outlook
Analysts expect earnings and regional events to drive the market next. Easier inflation or calmer Middle East tension could cool oil prices and strengthen the case for lower rates. If tension persists, it could keep capping gains.
Sources: Dawn, Arif Habib Limited, AKD Securities.
