Daily Times

KARACHI: Bearish sentiments at Pakistan stock market entered new week on with benchmark KSE100 index declining to another 2017 low, sliding 668 points to close at 41,974 points.

Market opened gap down in the morning as notification issued in pre-open by Habib Bank on facing hefty penalization spooked investors and dented market sentiments.

New York State Department of Financial Services (DFS) seeks to impose monetary penalty of up to $630 million for noncompliance of regulations at its New York branch. The Bank in material information to PSX announced its decision to wind up operations in New York and to vigorously contest DFS’s “unjustified capricious and unreasonable” measure in the scheduled administrative hearing and the courts of law in United States.

“HBL’s consolidated profits in 2016 stood at $323 million (Rs34.1 billion) and the maximum penalty of $630 million could have an earnings impact of Rs45/share. As per Pakistan Corporate tax law, fine or penalty paid or payable for the violation of any law, rule or regulation, is not tax deductible”, analysis report of Topline Securities said.

A downward revision in penalty amount cannot be ruled out after HBL said that they will contest in U.S Courts. In 2016, Deutsche Bank had agreed to pay $7.2 billion to U.S authorities, significantly lower than the original fine of $14 billion over an investigation into mortgage-backed securities.

On Monday Mari Petroleum too started the day limit down on weekend news of governments decision to offload its stake via SPO. Wider market during the day skidded down and traded lackluster as evident from just 103 million shares exchanging hands on KSE All Index, down 43% from last week average.

Top 10 Index point decliners were HBL (-5%), UBL (-3.4%), MARI (-5%), ENGRO (-2.3%), PPL (-1.5%), MTL (-5%), DAWH (-2.7%), DGKC (-3%), MCB (-1%) and LUCK (-1.7%) withholding 427 points.

On the sector front Banks took away 277 points as HBL’s sentiment weighed on other big banks, E&Ps shed 72 points as Oil prices are expected to weaken in lieu of Hurricane Harvey disrupting US Gulf refining demand, and cements dented 70 points on price concerns.

Participation was minimal as volumes receded 42% to 103 million shares while traded value fell 39% to Rs 5.7bn/ $54 million.

Azgard Nine remained the top volume leader with 12.75 shares traded followed by TRG Pak 11.5 million, Sui South Gas 7.8 million, Bank of Punjab 4.4 million and Sui North Gas 3.7 million.

Shares of 377 companies were traded on Monday out of which 86 advanced, 266 declined while 25 remained unchanged.

Analysts expect the market to remain under pressure and trade volatile particularly during this short week due to the dearth of positive triggers in sight.

Published in Daily Times, August 29^th 2017.