Stock market plummets 1,300 points as trading opens

[SunilM]

Stock market plummets 1,300 points as trading opens

The KSE-100 index plummeted 1,300 points in intraday trading as the Pakistan Stock Exchange (PSX) opened on Monday.

Trading opened at 40,496 points and dropped to 39,177 points within an hour ─ a change of 1.319 points ─ before rising to 39,293 points.

The fall comes on the back of the State Bank of Pakistan's (SBP) monetary policy announcement on Friday and a fall in the value of the rupee.

From Aug 17 to Nov 22, the KSE-100 Index has drifted down by 1,573 points or 3.8pc. The benchmark closed at 40,874 points on Nov 22, from 42,447 points at the start of the era of the present government.

While politically, the government has been pretty comfortable, the economy remains in the eye of the storm. The government has had to grapple with fast depleting foreign exchange reserves and ever-widening deficits.

The rupee closed at 139.06 to the dollar in the interbank market on Nov 30, a depreciation of 3.8pc in its value.

Bankers said this happened as the SBP silently watched the demand for dollars rising on imports and external debt payments. It was so intense and sudden that the dollar surged to Rs144 at one point on Friday before closing lower.

Also on Nov 30, the SBP raised its key policy rate by 150 basis points to contain inflation, a product of several economic factors, most notably a weaker rupee.

Spectators and analysts, however, expected just a 1pc hike in the policy rate, DawnNewsTV reported, adding that the increase brings the policy rate into double digits amid reports that the move is linked to talks with the International Monetary Fund (IMF) on a bailout package.

The timing of the twin moves suggests Pakistan has finally started fulfilling some pre-conditions of a fresh IMF loan, though Finance Minister Asad Umar has said he is in no hurry to get it. The government does not disagree with the Fund’s concerns on economic fundamentals, bankers and analysts say.

Also, it does not disagree with the Fund’s prescription for curing our ailing economy: let the overvalued rupee find its real market worth, minimise energy subsidies, reduce development and non-development expenses, hike interest rates — and choose economic stability over growth in the process.

https://www.dawn.com/news/1449162/stock-market-plummets-1300-points-as-trading-opens

PTI govt = of wild swings and more. One day currency plummets, the next day the stock market!!

 

[SMC]

Good day for you to rub one out. You might go senile if you don't take this opportunity.

 

[punit]

So sad so bad !

 

[Mage]

So sad so bad !

That's not the correct way. The correct way is:

"This is very bad and very sad "

 

[lightoftruth]

Debt trap is set.

 

[Mage]

Debt trap is set.

There is no debt and there is no trap.

@BHarwana will find a way to say that it is a indication of Pakistan's thriving economy...stock market crashing is good for economy.

 

[maithil]

If PKR depreciates to 200 per dollar, we will see huge export from Pakistan. Then economy will be on track and poor people will eat cake.

There is no debt and there is no trap.

@BHarwana will find a way to say that it is a indication of Pakistan's thriving economy...stock market crashing is good for economy.

Exactly. Stock markets do not matter if fundamentals of economy is stlong. Very soon PKR will touch 200 and Pakistan will export more wheat and sugar and earn foreign currencies.

 

[SunilM]

If PKR depreciates to 200 per dollar, we will see huge export from Pakistan. Then economy will be on track and poor people will eat cake.

PKR should settle at 175 to a dollar by the end of 2019. 200 will be around 2020.

 

[valkyr_96]

PKR should settle at 175 to a dollar by the end of 2019. 200 will be around 2020.

On what basis?, the stock market is correcting towards fair value as people who have enjoyed tax rebates will pull out money from mutual funds. The stock market has been artificially hyped from sometime now first it was used to park laundered money through amnesty schemes.

 

[SunilM]

On what basis?, the stock market is correcting towards fair value as people who have enjoyed tax rebates will pull out money from mutual funds. The stock market has been artificially hyped from sometime now first it was used to park laundered money through amnesty schemes.

On the basis of what I have said in another thread:

"Try to understand, what i am saying is that you are being a sold a lie as far as far as the economy is concerned and successive governments including IK's are playing a part in it. For example lets talk about the foreign exchange reserves. Asad Umar had the audacity to say that the immediate balance of payment crisis has been taken care of, which is a lie and nothing more since all you have received is 1 Billion dollars after 3 trips. And even that 1 Billion dollars has to be returned in 1 year. Now once you go through the articles I setout herein under you will understand the quagmire the economy is in....

Troubles ahead: Balance of payments crisis appears far from over
........
The current gross official $8.2 billion reserves are largely maintained by taking short-term loans from commercial banks and taking Chinese and Saudi deposits under the currency swap arrangements.

As of September this year, the central bank borrowed $7.22 billion from commercial banks under the forward and currency swap arrangements, according to data that SBP released on Wednesday. The central bank was required to return $1.5 billion within one month, $3.2 billion in two months and remaining $2.6 billion up to one year, according to the official data.

In addition to this, SBP owes $3 billion to China, $1 billion to Saudi Arabia and $700 million to other sources, according to the sources. Around $453 million were to be repaid to the IMF in this fiscal year, which will be a direct charge on the SBP reserves.

This has resulted into negative $4 billion foreign currency reserves.

The $7.22 billion loans have been obtained by the central bank from commercial banks under F-25 and F-3 circulars, taking benefits of the foreign currency deposits of Pakistanis as well as foreign nationals, according to the sources in the banking sector.

The loans obtained under F E-25 circular are also shown part of both the central bank and commercial banks’ reserves. This is tantamount to double-booking of the currency reserves. Few months ago, Dr Asfhaque Hasan Khan, now a member of the Economic Advisory Council, had also termed the SBP’s foreign currency swaps deal as double booking. He had suggested that the swaps should have been excluded from the commercial banks’ reserves.

...........

https://tribune.com.pk/story/1856330/2-troubles-ahead-balance-payments-crisis-appears-far/

Do read the full article its a treasure trove of facts. What does it say :

1) That SBP has no money of its own in its account, its all currency swap and loans from commercial banks, which money finally belongs to Individual Depositors. The Actual forex with SBP is 8.2- 7.2 Billion i.e 1 Billion dollars. Thats an amount which will cover import bill of a few days and not even a month.

2) If we include the Commercial loans/ Currency swaps also, The Forex reserves are currently 4 Billion dollars in the negative.

3) The monthly gap i.e CAD is around 1 to 1.5 Billion dollars a month. Which means every month Forex reserves will get reduced by 1 Billion dollars atleast apart from Debt repayment. This apart from the fact that short term liability is around 12 Billion US dollars.

4) The trade Deficit is huge and even after all the devaluation decreased by a measly 1.63 % in the first quarter. Export growth has stagnated to 2 -3 % for the current fiscal which is pathetic considering the start devaluation.

"The country’s trade deficit has recorded at $8.9 billion during July-September period of the ongoing financial year as against $9.01 billion of corresponding period of previous year, showing a minor decline of 1.61 percent."
https://nation.com.pk/11-Oct-2018/trade-deficit-cut-by-1-63pc-in-first-quarter

5) No headway in $1bn China market access package
"Adviser to Prime Minister Abdul Razzak Dawood announced the export package from China after PM Imran Khan made a four-day visit to Beijing and Shanghai during the first week of November.
According to sources familiar with the matter, the ‘market access’ announcement was earlier misunderstood by Pakistan as Beijing’s willingness to allow purchase of goods on state level to extend benefits to the country. Following the PM’s visit to China, Islamabad expected that China will purchase additional surplus quota of wheat, sugar, rice and other agriculture commodities which are currently subject to restrictions.

However, unconfirmed reports claim that the Chinese authorities have informed the government that any package from Beijing will be a part of the second phase of the China-Pakistan free trade agreement (FTA).
https://www.dawn.com/news/1448903

So the Chinese are telling you to give China a favorable FTA if you want additional 1 Billion in trade. And inreturn Chinese will seek an additional 5 Billion. So the trade deficit will only increase. Also show the incompetence of Asad Umar and the who Pakistani economic team or as I was saying they were just lying to the aawam since they had been shouting at the top of their voices before the TRIP of securing billions from Chinese Birader.

6) While they mislead the general public, SBP has dropped the GDP growth to 4 % in FY 19. This is a central bank figure which is a little over optimistic and real growth will be around 3-3.5 % keeping in mind the fact that interest rates have been increased to 10% and will be further increased to 12% as demanded by the IMF.

https://arynews.tv/en/sbp-raises-policy-rate-by-150-stability/

Growth will retard completely due to this apart from the fact that devaluation will stroke inflation which will cross that double figure mark by next month and should settle around 12% which will kill the purchasing power of the general public. Now in this backdrop how will PTI generate 1 crore jobs ? Its next to impossible. Hence IK is telling everyone to indulge in poultry farming.

7) With the devaluation, the economy has contracted to around 230bn, i.e the size of the economy around the early 2000's, with such major contraction and no stability whatsoever in the currency market, The real economy could contract even further which will bring more misery to people.

8) With IMF becoming an inevitable option and the strict conditions imposed by them where development budged it slashed and subsidies reduced further, leave alone building new houses for them, the govt would do well to ensure they can take care of the marginalized most hit by the effects of inflation. For example after having increased gas prices, another increase is sought
IMF conditions: SNGPL requests Ogra to increase gas prices

To fulfill the condition of the International Monetary Fund (IMF), the Sui Northern Gas Pipelines Limited (SNGPL) has requested the Oil and Gas Regulatory Authority (OGRA) to further increase gas prices.

Hike in gas tariff will put burden of Rs91 billion on consumers.

The SNGPL authorities have requested Rs215 and Rs103 per cubic foot hike hike in the prices of gas and liquefied natural gas (LNG) respectively as Rs91 billion are required for the current fiscal year.

The authorities further stated that losses due to gas theft will also be recovered from the consumers.

Ogra will hear SNGPL’s plea on December 10 and if approval is given, new prices will be applicable from 1st July.

https://dunyanews.tv/en/Pakistan/468574-SNGPL-request-Ogra-gas-price-hike-IMF-conditions"



Btw, its fallen by 1400 points. Will it set the record for the biggest fall in one day? or will the govt through state institution try to prop up this market in a meltdown.

 

[enquencher]

Stock market plummets 1,300 points as trading opens

The KSE-100 index plummeted 1,300 points in intraday trading as the Pakistan Stock Exchange (PSX) opened on Monday.

Trading opened at 40,496 points and dropped to 39,177 points within an hour ─ a change of 1.319 points ─ before rising to 39,293 points.

The fall comes on the back of the State Bank of Pakistan's (SBP) monetary policy announcement on Friday and a fall in the value of the rupee.

From Aug 17 to Nov 22, the KSE-100 Index has drifted down by 1,573 points or 3.8pc. The benchmark closed at 40,874 points on Nov 22, from 42,447 points at the start of the era of the present government.

While politically, the government has been pretty comfortable, the economy remains in the eye of the storm. The government has had to grapple with fast depleting foreign exchange reserves and ever-widening deficits.

The rupee closed at 139.06 to the dollar in the interbank market on Nov 30, a depreciation of 3.8pc in its value.

Bankers said this happened as the SBP silently watched the demand for dollars rising on imports and external debt payments. It was so intense and sudden that the dollar surged to Rs144 at one point on Friday before closing lower.

Also on Nov 30, the SBP raised its key policy rate by 150 basis points to contain inflation, a product of several economic factors, most notably a weaker rupee.

Spectators and analysts, however, expected just a 1pc hike in the policy rate, DawnNewsTV reported, adding that the increase brings the policy rate into double digits amid reports that the move is linked to talks with the International Monetary Fund (IMF) on a bailout package.

The timing of the twin moves suggests Pakistan has finally started fulfilling some pre-conditions of a fresh IMF loan, though Finance Minister Asad Umar has said he is in no hurry to get it. The government does not disagree with the Fund’s concerns on economic fundamentals, bankers and analysts say.

Also, it does not disagree with the Fund’s prescription for curing our ailing economy: let the overvalued rupee find its real market worth, minimise energy subsidies, reduce development and non-development expenses, hike interest rates — and choose economic stability over growth in the process.

https://www.dawn.com/news/1449162/stock-market-plummets-1300-points-as-trading-opens

PTI govt = of wild swings and more. One day currency plummets, the next day the stock market!!

Dost Dost missed u for so manydays. Wecome back.

 

[El Sidd]

Oye yaar ye "Sunil" banda roz muth maarne ki koshish kerta hai aisay articles parh k lakin Pakistan phir bhi chalta rehta hai. Iski arsay se muth phansi hui hai...koi sirf 2, 3 ghantay k liye Pakistan ko bankruptcy declare ker deni chahiye takay iski muth nikal jaey. Koi reham kero uski haalat per.

@Reichsmarschall @Areesh @Retired Troll

dekhiye janaab aap inke jazbaat se ese na khelen....
nannhi munni khwahishaat hain inki.... thori tolerance paida karen... warna aap Katta or Murghi kese paalenge?

 

[enquencher]

I think this is temporary thing share market will rise once all poultry farms will come with ipo.

 

[SunilM]

I think there is a difference between running a hospital or Engro and running a country!!

 

[valkyr_96]

Bhai I was a investment banker with JS Group I know Pakistan has problems I am simply saying that the stock exchange is not a barometer for Pakistan's economy and why would/should the government prop up the markets. There is no precedent for this. PTI is a non interventionist government. In fact so far they haven't even removed Tariq Bajwa who was PMLN blue eyed boy and AJS the US ambassador who is the CEO of my bank. Zardari government had propped up the stock market by providing a amnesty scheme provided if the money was invested for a certain time in the stock market this was continued in PMLN government. Add to this the generous tax rebates offered, this they tried to pass off as an emerging market in MSCI which completely flopped, the market has been due for a correction. People are puting out money from mutual funds and into term deposits. Please understand the the free float of PSX companies is very little and the small traders are those that think you can make one rupee into two based on technicals.