PSX slumps as profit-taking reigns supreme
The Pakistan Stock Exchange (PSX) experienced a noticeable decline, as the benchmark index KSE-100 dropped 1,509 points in intra-day trading. The slump follows the second-largest single-day pointwise rise in the KSE-100.
Bearish sentiments resulted in profit-taking, causing 288 of the 456 companies being traded publicly to close at a lower value than the previous day. Automotor companies were some of these companies that suffered a decline. Notably, Hinopak Motor approximately 6.9 per cent of its share value, while Honda Atlas Cars and Indus Motor Company (manufacturer of Toyota vehicles) lost 5.06 per cent and 1.36 per cent of their value, respectively.
Despite the financial carnage causing such a large number of companies to decline on the PSX, 129 companies actually managed to advance in share value. Notable companies that advanced in intraday trading include Fauji Foods Ltd and Attock Petroleum, which managed to close 1.62 per cent and 3.45 per cent higher, respectively.
The All Share Index (ALLSHR) dropped 1.36 per cent by the end of the trading day, a loss of approximately 962 points. Despite the unusually high variation in share prices recently, foreign ownership of shares has risen by 0.30 per cent since the beginning of the month.
The fall in the PSX could be attributed to the country's political landscape. As it stands, the Pakistan Tehreek-e-Insaaf (PTI) has met with Islamabad in the hopes of reaching an amicable solution. If both parties reach an agreement, economic progress can continue undeterred as investors will not fear political tensions causing them financial losses.
Despite everything, the talks have moved along sluggishly, with no concrete solution emerging in the near future. According to Dawn News, it might take a considerable amount of time before the political tensions are diffused with dialogue. This spells bad news for investors.
It doesn’t seem as if the talks will progress much further either, as key members of PTI’s leadership were missing from the negotiations, and PTI's demands for Imran Khan’s release seemed unrealistic. Nevertheless, if peace can be arbitrated between Islamabad and PTI through negotiations, the PSX is expected to see persisting bullish trends as investor confidence is restored.
Publicly, however, the listed companies will have to find a way to weather the storm and hope they can preserve their share value until a greater level of political stability returns to Pakistan. This will be a significant challenge for companies such as Mari Petroleum, which is experiencing a decline in the PSX.