KSE-100 feels the heat as Russia-Ukraine tension rises

Pakistan stocks felt jitters of the Russia-Ukraine conflict as the KSE-100 lost nearly 700 points in intra-day trading before a final-hour recovery helped the index erase almost half its losses.

Rising geopolitical tension between Russia and Ukraine pushed oil prices near $100 a barrel early on in the day, a development that is a negative for the commodity's net importers like Pakistan. The currency market also felt its effects, with the rupee losing 0.27% in the inter-bank market on Tuesday.

The Pakistan Stock Exchange (PSX), which has seen muted interest in the past several weeks, saw greater activity, but with pressure from the sell-side as investors were keen to offload their holdings.

KSE-100 falls below 45,400 as investor-interest remains muted

During the morning, the KSE-100 lost nearly 1.5% (664 points) before cherry-picking in the final hour helped the index manage a finish over the 45,000 level.

At close on Tuesday, the KSE-100 finished with a drop of 350.67 points or 0.77% to finish at 45,012.18.

Expressing concern over the development, Saad Khan, Head of Research at IGI Securities, told Business Recorder that rising oil prices would also push prices of food and transport in the local market, raising the cost of production for companies.

“In addition, the import bill will swell, causing the current account deficit to widen, leading to foreign exchange reserves depletion,” he said.

Khan added that if the current trend in oil prices persists, Pakistan’s foreign exchange reserves will come under severe pressure.

Meanwhile, on the corporate front, Kot Addu Power Company Limited (KAPCO) announced its 2QFY22 result, where the company posted a profit after tax (PAT) of Rs3,328 million with an EPS of Rs3.78, down 37% YoY compared to Rs5,296 million alongside an EPS of Rs6.02 during the same period last year.

Sectors dragging the benchmark index down on Tuesday included technology and communication (124.17 points), cement (54.10 points) and fertiliser (40.52 points).

Volume on the all-share index increased to 227.17 million from 137.66 million on Monday. The value of shares traded more than doubled to Rs7.63 billion from Rs3.61 billion recorded in the previous session.

WorldCall Telecom was the volume leader with 23.69 million shares, followed by Bank of Punjab with 14.41 million shares, and TeleCard Limited with 12.9 million shares.

Shares of 341 companies were traded on Tuesday, of which 75 registered an increase, 252 recorded a fall, and 14 remained unchanged.

Early market reaction

Earlier on in the session, the KSE-100 had plunged to nearly 44,700 as investors resorted to panic-selling on rising tension between Russia and Ukraine.

“The geopolitical tension created negative sentiment among investors,” Sana Tawfik, vice-president research and a senior analyst at Arif Habib Limited (AHL), told Business Recorder.

KSE-100 falls nearly 1% on Russia-Ukraine conflict jitters

Russia’s President Vladimir Putin, during his long-televised speech yesterday, recognised two breakaway regions in eastern Ukraine as independent entities.

Putin, in a lengthy televised address, said eastern Ukraine was ancient Russian lands and that he was confident that the Russian people would support his decision.

The development with all its political implications also took a toll on the economic front, as oil prices jumped more than $2 to a fresh seven-year high on Tuesday.

Like PSX, markets across the globe felt the impact. MSCI's broadest index of Asia Pacific shares outside Japan was on course for its worst day for this month, off 2.1%, weighed by markets in Hong Kong and mainland China. Japan's Nikkei shed 2.5%.

Meanwhile, oil prices witnessed another swift rally and Brent crude touched $97 per barrel.

“Till tensions remain, liquidity will stay out of the PSX,” Tawfik added.