Market expert terms PSX latest nosedive as ‘synchronised’ & ‘coordinated’ sell-off

The latest nosedive in stocks at the Pakistan Stock Exchange (PSX) has been called market expert as a ‘synchronised’ and ‘coordinated’ sell-off

“I believe this is a synchronised sell-off and it was coordinated. The apex and frontline regulators should look into it,” said Najam Ali, CEO Next Capital, while talking to a private channel.

Najam was of the view that market drop was very predictable as there was a concentration in few stocks whereas the market leverage increased significantly.

Pakistan Stock Exchange Thursday again nosedived due to panic selling in almost all sectors on investors concerns over the prevailing political situation in the country.

The KSE-100 Index plunged by 911.92 points or 2.09 percent to close below 43,000 level at 42,779.76 points. The KSE-100 Index has lost 3,058 points or 6.7 percent during the last four trading sessions. This is the highest 4-day losing streak after March 18, 2020, when the market fell sharply on fear of the Covid outbreak and the KSE-100 Index touched 63 sessions’ lowest level Thursday.

Whereas, the market capitalization declined by Rs 184 billion to Rs 7.647 trillion.

Elaborating on the development, CEO Next Capital said: “What happens is whenever a price bubble is created in the market which is especially concentrated in some stocks and market leverage also increase… Unfortunately, inside information is also openly available in the market and investors take advantage of this,” he said.

He urged the market regulators to increase the number of scrips in the market, whereas the concentration risk of stocks should be decreased.

In a separate tweet, Najam Ali stated: “I have no issues with stock market speculation or speculators. It is a norm in any stock market. In a way, it helps in price discovery. However, I have serious issues when there is no level playing field or rules of the game are abused by a few.”