Trading at the Pakistan Stock Exchange was paused for 45 minutes on Monday after the benchmark index fell 2,106 points soon after opening.
According to reports from the market, activity was paused around 9:40am after a rapid 5.83 per cent decline in share prices was witnessed. According to bourse rules, if the KSE-30 index falls 4pc or more, trading is halted for 45 minutes, analysts told media.
Discussing the tumble with Dawn.com, Deputy Head of Research at AKD Securities, Ali Asghar Poonawala, said: “Following the failure of Organisation of the Petroleum Exporting Countries (Opec) talks to yield any consensus on output cuts and ongoing spread of COVD-19 virus beyond China, crude benchmarks tumbled drastically with Brent down close to 31% – the most drastic decline since the 1991 Gulf War.”
Poonawala said oil exploration and production companies constitute 15.3pc of the total market capitalisation. These companies also make up 13.2pc of the KSE-100 index with Oil & Gas Development Co (OGDC) being the second largest stock by market cap.
“With no Opec deal on the horizon, previous cuts of 1.7million barrels per day (bpd) agreed upon by the 23 country cartel will likely expire, unleashing significant supply upswing.
“Additionally, from early January peaks, crude benchmarks had already shed 30pc of their value on the back of coronavirus spreading beyond China and spillovers for global economic growth,” Poonawala said.
Head of Foreign Institutional Sales at Next Capital Limited Muhammad Faizan told Dawn.com that markets have been falling internationally due to coronavirus and Russia’s decision to back out of the Opec deal.
International oil prices fell by as much as a third when Saudi Arabia decided to start a trade war after Russia refused to back further steep output cuts proposed by Opec to stabilise oil markets hit by worries over the global spread of the coronavirus.
Saudi Arabia over the weekend cut its official selling prices for April for all crude grades to all destinations by between $6 and $8 a barrel.
Saudi Arabia plans to boost its crude output above 10 million bpd in April after the current deal to curb production expires at the end of March, two sources told Reuters on Sunday.
Sea of red
Trading floors were a sea of red, with Tokyo, Sydney and Manila plunging around six percent, while Hong Kong shed 3.5 percent by lunch.
Mumbai, Singapore, Seoul, Jakarta and Wellington were more than three percent down, Shanghai and Taipei shed at least two percent and Bangkok gave up five percent. The losses tracked sharp falls in Europe and Wall Street on Friday.