KARACHI: A staggering sum of Rs170 billion was wiped off the market capitalisation at the Pakistan Stock Exchange (PSX) in a single day where the KSE-100 index fell 1160.72 points and sank way below the 38,000-level at 37,058.95 on Monday.
The KSE 100 index came crashing down as investors offloaded stocks in wake of the coronavirus. The bourse declined 1160.72 points, or a decrease of 3.13 percent to 37,058.95 points.
Oil prices fell by as much as a third following Saudi Arabia’s move to start a price war after Russia balked at making the further steep output cuts proposed by OPEC to stabilise oil markets hit by worries over the global spread of the coronavirus.
Among other persisting factors, include the rout in global equities, the suspension of imports from China and the adverse affects on the Asian economy and sharper than expected downturn in world economies as the novel coronavirus outbreak continues to invade countries.
Investors last week continued to dump stocks and plough their money in safe haven assets, mainly gold.
According to experts, the stock market has been searching for a proper direction for healthy growth but several factors continue to dominate the sentiments of potential investors.
Global share markets tumbled on Monday as panicked investors fled headlong to bonds to hedge the economic trauma of the coronavirus, and oil plunged more than 30% after Saudi Arabia opened the taps in a price war with Russia.
Investors drove 30-year U.S. bond yields beneath 1% on bets the Federal Reserve would be forced to cut interest rates by at least 75 basis points at its March 18 meeting, despite only just having delivered an emergency easing.
The safe-haven yen surged across the board as emerging market currencies with exposure to oil, including the Russian rouble and Mexican peso, tumbled.
Saudi Arabia had stunned markets with plans to raise its production significantly after the collapse of OPEC’s supply cut agreement with Russia, a grab for market share reminiscent of a drive in 2014 that sent prices down by about two thirds.
The shock in oil was seismic as Brent crude LCOc1 futures slid $13.53 to $31.74 a barrel in chaotic trade, while U.S. crude CLc1 shed $13.45 to $27.83.
“Today’s price action puts at risk the fiscal health of the vast majority of sovereign producers and budget cuts and increased debt loads are now looming in the event of a prolonged period of low prices,” warned Helima Croft, head of global commodity strategy at RBC Capital Markets.
