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August 24, 2019

Index plummets as Indian fake news on FATF listing spooks investors

Business

August 24, 2019

Stocks fell more than 1.5 percent on Friday, ending the bullish trend, as investors were spooked by fake news spread by the Indian media regarding Pakistan’s addition in the “enhanced black list” of Financial Action Task Force, the news was denied by the Finance Ministry and FATF officials, both, dealers said.

Madiha Javed head of research at Ismail Iqbal Securities said, “KSE-100 Index turned negative today after rumours suggesting that Pakistan is being placed on blacklist by Asia-Pacific Group (APG) but official statement released by the Finance Ministry clarified that the final decision would be made at the end of FATF review meeting in October.”

Investors’ participation declined with 230 million shares traded compared to 261 million shares traded in the previous session. Oil and gas exploration, commercial banks, and fertiliser were the major draggers, cumulatively shedding 365 points, Madiha added.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index lost 1.68 percent or 534.43 points to close at 31,350.02 points level. KSE-30 shares index followed suit with a low of 1.92 percent or 290.28 points to end at 14,847.96 points level.

Of 358 active scrips, 130 went up, 213 retreated, and 15 remained unchanged. The ready market volumes stood at 230.725 million shares, as compared with the turnover of 261.691 million shares in the previous session.

Analyst Ahsan Mehanti from Arif Habib Corporations said, “Panic gripped investor sentiments at PSX amid rumours on FATF Mutual Evaluation Report (MER) assessment, now requiring a next round of enhanced follow up progress quarterly report to decide on blacklisting by AGP.”

Foreign outflows, uncertainty over outcome of Kashmir status, and fall in global crude oil prices played a catalytic role in the bearish close, Mehanti added. Although, the APG has adopted Pakistan’s third MER, it was all set to come up with its findings soon. Probably the APG would announce it within next few days

Salman Ahmad, head of institutional sales at Aba Ali Habib said the market has entered the overbought zone. He explained that under this condition, even slightly negative news could turn catastrophic for the market. The news portrayed about FATF was enough to squeeze the run up after hefty gains were witnessed in the last four sessions.

In upcoming sessions as roll over week commences, further pressure would be out on the market. However, with share values still on attractive levels, the index would soon see stability, Salman added.

Some dealers also said that the market closed on a negative note because of the weekend and profit selling by the investors, as the market in the last four sessions scored more than 3,100 points. The highest gainers were Sapphire Textile, up Rs61.70 to close at Rs1,310.98/share, and Sanofi-Aventis, up Rs26.12 to finish at Rs548.70/share.

Companies that booked highest losses were Island Textile, down Rs106.99 to close at Rs2,033.00/share, and Sapphire Fiber, down Rs45.00 to close at Rs855.00/share. Unity Foods Limited recorded the highest volumes with a turnover of 18.868 billion shares. The scrip lost Rs0.15 to end at Rs9.33/share.

The lowest volumes were witnessed in K-Electric Limited, recording a turnover of 5.374 million shares, whereas the scrip lost Rs0.19 to end at Rs3.56/share.

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