Shares continued their grim run on Wednesday, with the benchmark KSE-100 index closing 1,336 points or 4.68 per cent in the red, as Pakistan grapples with the repercussions of the coronavirus outbreak that has brought economic activity to an almost standstill in the country.
The KSE-30 closed at 11,833, down 693 points or 5.53pc for the day.
Trading was halted at the Pakistan Stock Exchange less than an hour into the opening bell after the KSE-100 tanked over 4 per cent — 1,270 points — to reach 27,294. Meanwhile, the KSE-30 index shed 5.33pc to reach 11,859 by 12:19pm, when trading was brought to a halt.
According to the new rules adopted by the Securities and Exchanges Commission of Pakistan in light of the extraordinary situation brought on by the virus outbreak, threshold for trading halt in individual stocks has been revised – from 7.5pc to 5pc – and that for a wider market halt has also been changed from 5pc tp 3pc linked to the large cap KSE-30 index. The trading lock now lasts for 2 hours, as opposed to 45 minutes before the latest changes.
After trading resumed at around 2:24pm, the market saw a minor spike, reversing some of its losses with the benchmark index rising over 600 points to reach 27,994 by 2:45pm. But this momentum could not be maintained till market close, with the index closing at 27,228 – down 4.68pc for the day.
Speaking to Dawn.com, Deputy Head of Research at AKD Securities, Ali Asghar Poonawala noted that at current levels (27,295 points), the benchmark KSE-100 had erased around a third of its value during the year 2020.
"The steepness of this correction is signified by the fact around 29pc of this decline came since Feb 26 (first virus case reported in Pakistan) with 15 out of the 20 sessions since then firmly in the red," Poonawala said.
These levels (benchmark index at around 27,300 points) were last witnessed around six years ago, according to Poonawala, when on April 1, 2014, the KSE-100 index closed at 27,159 points.
He said stocks did undergo "a minor spurt of momentum at the open" today, as investors reacted to much needed policy action where Pakistan joined the growing list of countries announcing stimulus packages for the domestic economy, with a support outlay of Rs1.2 trillion.
Additionally, he said the State Bank of Pakistan had entered the fray with a 150bps reduction in the policy rate, taking the cumulative rate reduction to 225bps within a week.
"But this failed to provide the antidote to the uncertainty being witnessed, leading equity indices to their second halt of the week," according to Poonawala.
"As the COVID-19 outbreak has no precedent, with the impact yet to be completely gauged even in its epicenter of Wuhan city and the Hubei province, where a lockdown was eased after two months, and development with requisite approvals of treatments, whether symptomatic or prophylactic are currently in nascent stages, judging the complete ramifications of this event is premature," he went on to say.
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