Stocks plunge as govt plans divestment in E&Ps
KARACHI: Following two sessions of minor gains, investors lost their cool on Thursday and jettisoned shares causing the KSE-100 index to plunge 479 points (1.6 per cent) and close at 30,159.
The exploration and production sector wiped off 155 points from the index as investors ran to dump shares in the Oil and Gas Development Company (OGDC) and Pakistan Petroleum Ltd (PPL) after the formal advertisement of the Privatisation Commission (PC) regarding divestment of government stake in both companies by 7pc and 10pc respectively.
That spooked the investors who believed that a sizeable increase in market float would result in further discounting price of two stocks. PPL hit its lower circuit while OGDC also closed near its lower limit.
Already jittery, the announcement by the PC could not have come at a worse time. Analysts said the retreat came amid lingering concerns on border tensions, the Financial Action Task Force uncertainties and the surging budget deficit, where missing revenue targets could result in a mini-budget to raise taxes to meet the International Monetary Fund quarterly reviews.
In the midst of all the chaos, the only good news was the Gas Infrastructure Development Cess Ordinance released by the government which waived 50pc of outstanding amount for fertiliser sector. It provided relief to the fertiliser stocks with the Fauji Fertiliser Company and Fauji Fertiliser bin Qasim Ltd hitting upper circuits.
During the day, the index hit intra-day high and low by 171 points and 250 points. Volumes declined 21pc day-on-day from 149 million shares to 118.4m shares.
Traded value also declined by 19pc to reach $27.8m as against $34.2m. Stocks that contributed significantly to the volumes include Lotte Chemical, K-Electric, Worldcall Telecom Ltd, Pak Elektron and OGDC, which formed 29pc of total volumes.
Major drag to market performance was attributable to heavy losses in most blue chips including OGDC down 4.44pc, PPL 5pc, Habib Bank Ltd 2.22pc, United Bank Ltd 1.86pc, Lucky Cement 2.59pc, Hub Power Company 1.27pc, Pakistan Oilfields Ltd 1.70pc, Bank Al Falah Ltd 2.78pc, Engro Corporation 0.96pc and Pakistan State Oil 3.35pc.
Published in Dawn, August 30th, 2019
