Pakistani stocks fall 4.2% as rupee eases 1.6%

Karachi: Pakistani shares fell more than 4 per cent on Tuesday to a more than three-year low after the removal of a floor on the main index the previous day, and dealers said they expected more downward pressure for the next few sessions.

The rupee slipped 1.6 per cent as negative sentiment prevailed on fear of portfolio outflows following the removal on Monday of the stock index floor, dealers said. The rupee has fallen 24.2 per cent since the beginning of the year.

The Karachi Stock Exchange (KSE) benchmark 100-share index ended 4.22 per cent, or 372.21 points, lower at 8,444.89, its lowest since November 2005, on turnover of 6 million shares.

The KSE index fell 4.03 per cent on Monday after the floor on the index, imposed on August 28 after sharp falls, was removed.

"The market will continue to face pressure until it matches the trades that have been witnessed in off-market transactions," said Shuja Rizvi, director of broking operations at Capital One Equities Ltd.

According to the latest data up to December 15, in off-market transactions, Oil and Gas Development Co Ltd was being traded at Rs55.80, (Dh4.29) or 33 per cent lower than its official closing on Tuesday.

National Bank of Pakistan was traded at Rs55 or 34.5 per cent lower than its Tuesday close.

Dealers said there were a few trades, about 100 shares a company, in blue-chips at their lower circuit breakers with most trade in third-tier stocks.

The KSE index has a daily 5 per cent limit.

The index floor saw trade virtually coming to a halt as it blocked investors from exiting the market and brokerages cut jobs, with JP Morgan suspending its equities operations in Pakistan in late November.

MSCI said last week it was removing Pakistan from its emerging markets index.

The KSE management, including the Securities and Exchange Commission and the National Clearing Company of Pakistan Ltd, are facing legal cases filed by brokers seeking settlement of amounts borrowed through a continuous funding system, a funding mechanism for some stocks listed on the KSE.

One hearing will resume on Tuesday.

In the currency market, dealers said fear of portfolio outflows put pressure on the rupee and it was traded 1.7 per cent lower at 81.30 to the dollar, compared with Monday's close of 79.95/80.05.

The rupee was quoted closing at 81.25/35 to the dollar.

"We could see the dollar hitting 82 rupees in a day or two," said a currency dealer.

Dealers said there were a few import payments but sentiment had turned negative.

Islamic bond: Pakistan sets Rs10b target

Pakistan's central bank said on Tuesday it had set a target of Rs10 billion (Dh451 million) for its three-year Islamic bond.

The tender will be opened on December 20 at 11.30am and the result will be communicated the same day, the State Bank of Pakistan said. Settlement will be on December 29.

Pakistan's central bank sold Rs6.52 billion of the first local currency three-year Islamic bond in September.

- Reuters