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Sunday, April 14, 2024

Huge Volatility in Pakistan Stock Market Today

Huge volatility in the Pakistani stock market on Monday as the KSE 30 saw a sharp decline of over 2100 points. The market was halted for almost 1 hour as circuit breakers kicked in.

Karachi stocks – the KSE 30 saw a sharp decline this morning decreasing by 2100 points. This saw the circuit-breaker kick into the stock exchange market at 9:40 AM, when the KSE 30 saw a 5.83 per cent decline, the market was halted for almost 1 hour. Once the market started trading again it jumped up over 1800 points.

This kind of major trading halt gets applied at any point during the day when the KSE30 decreases by over 4% from its opening index value. The immediate cause was the oil price declines and Saudi Arabia and Russia refusing to cut production to stabilize the oil market.

The trade war between the two countries is not expected to lead them anywhere. KSA has decided to cut its sale prices officially for the month of April. Saudi Arabia over the weekend cut its selling prices for April for all crude grades to all destinations by between $6 and $8 a barrel.

This is in the general context of the global economy that is being affected after the deadly outbreak of coronavirus. The epidemic is producing major shifts in the global economy. Coronavirus is affecting worldwide economic growth.

Pakistan’s oil-producing firms comprise of almost 15.3 pc of the stock market’s value. OGDCL as the second most important stock market cap in the the KSE 100 index.

Read more: Coronavirus hits Pakistan Stock Exchange: Bloodbath amidst mounting fears

According to the latest news, KSA is upraising its crude outputs for the next month of approximately more than 10 million barrels a day.

There are a lot of regulatory concerns that have come up in the past few days regarding the stock exchange market. These concerns need to be addressed properly so as to minimize this kind of circuit breaks in the near future.

Overall Pakistan stock markets should improve soon as decline in bond yields show that the market is expecting an interest rate cut – which usually helps to rally stock markets. Pakistani bonds have declined in yield to almost 10.90% in the 3 year tenor, 10.25% in the 5 years and 10% for the 10 year bond.