KARACHI – The local bourse witnessed its lowest level in the current yearafter the benchmark KSE-100 index shed 1,010 points to touch 39,256 points.
The accountability court’s July 6 verdict that sentenced former primeminister Nawaz Sharif to eleven years in prison along with a fine of £8million fine (Rs1.3 billion) in the Avenfield properties reference, hasstirred investors. Nawaz’s daughter Maryam was also sentenced to eightyears with a £2 million fine (Rs335 million), while his son-in-law Captain(retired) Safdar Awan received a one-year prison sentence.
According to Yawar-uz-Zaman, who is the Vice President of the ResearchDepartment at a local brokerage house Shajar Capital, persistent politicaluncertainty has created an environment of risk-averse trading.
“Political uncertainty and foreign selling, which has persisted in themarket for a while now, have driven down the confidence of localparticipants,”.
He further observed that local investors are waiting for a further dip inthe market before they resume buying.
The cement sector took a significant hit during the first-half of theintra-day trading. Investors seemed to be unwilling to move away from theirselling positions. With the sector’s demand directly linked to thegovernment’s Public Sector Development Programme (PSDP), investors’lacklustre interest in the sector seemed to be driven from a cut in theprogramme by the caretaker government.
According to Zaman, the overall sentiment will remain depressed till thenew government takes control. “Investors won’t take new positions till thepolitical setup shows signs of certainty,” he noted.
Samiullah Tariq — who serves as a Director of the Research Department atArif Habib Corporation — also reiterated that political uncertainty was theprimary factor in the bearish trend that took over the market during theday’s trading.
“The money laundering inquiry that has been recently launched has alsoaffected the market, especially after the presidents of a few banks havebeen placed on the Exit Control List (ECL),” he said.
The president of a local bank, Hussain Lawai, was arrested by the FederalInvestigation Agency (FIA) on Friday in connection with alleged moneylaundering worth billions of rupees. The investigation agency is probing apotential money-laundering scandal of Rs35 billion implicating a toppolitical leader along with his businessman and banker friends.
“With Nawaz Sharif expected to return to the country on July 13, theinterest of local investors is likely to return in the next week,” Tariqsaid.
Responding to a question about the selling trend in the cement sector, theresearch professional noted that the sector’s earnings have had a pasttrend of taking a hit with the country’s macro outlook.
“Cement along with the auto sector has underperformed in the last year, andthe trend is likely to continue till the polls are held,” he said.