KSE-100 drops 1.21% amid sharp rise in secondary market yields – Markets
Negativity lingered on the Pakistan Stock Exchange (PSX) on Thursday as the benchmark KSE-100 extended losses due to surging secondary market yields, raising fears of a further rate hike director by the central bank.
At Wednesday’s auction, the threshold yield for all Treasuries rose 55 to 75 basis points. As a result, the KSE-100 index fell by 518.13 points or 1.21% to end at 42,237.91 points.
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The threshold yield on 3-month short-term government securities increased by 75 basis points to 15.25%, while yields on 6-month market treasury bills rose to 15.25%, in increase of 55 basis points. In addition, the limit yield on 12-month Treasury bills increased by 75 basis points to 15.5%.
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Stock market participants now expect the State Bank of Pakistan to raise the benchmark interest rate at a surprise meeting or at the next monetary policy meeting.
This sparked panic among market participants and they rushed to dump their holdings.
After trading in the positive zone for a brief period, the market slid as investors preferred to take profits. Market participants stayed away, leading to low trading volumes. The search for value emerged in the last hour, but the KSE-100 index still closed with losses.
A report by Topline Securities said Pakistani stocks trended lower amid more-than-expected increases in treasury bond yields. Yields rose 55 to 75 basis points across different mandates during Wednesday’s auction.
Capital Stake said indices fell while volumes contracted further. Stock markets around the world also showed a negative trend, he said.
On the economic front, the local currency maintained an uptrend for the fifth consecutive session against the US dollar and closed at 197.59 in the interbank market on Thursday.
Fifth day of gain: the rupee appreciates to 197.59 against the dollar
The sectors that dragged the benchmark KSE-100 down were banking (107 points), fertilizers (66.62 points) and cement (65.24 points).
The volume of the all-stock index contracted to 157 million from 194.4 million on Wednesday. The value of shares traded decreased to 5.29 billion rupees from 5.35 billion rupees recorded in the previous session.
Pak Refinery was the volume leader with 14.99 million shares, followed by Unity Foods Limited with 10.97 million shares and Cnergyico PK with 9.87 million shares.
Shares of 345 companies were traded on Thursday, of which 75 recorded an increase, 254 recorded a decline and 16 remained unchanged.