KSE-100 climbs 958 points as foreigners turn buyers

Investors cheer pro-business measures announced in second mini-budget

KARACHI: It was an outstanding week for the Pakistan Stock Exchange as the benchmark index surged 958 points, or 2.44%, to settle past the 40,200 mark on back of improved sentiments.

Investors rejoiced over the announcement of the second amended finance bill, which offered numerous incentives to businessmen. The Finance Supplementary (Second Amendment) Bill, 2019 was focused on improving ease of doing business, boosting exports and encouraging the small and medium industries. In a move aimed to directly benefit stock traders, the government abolished advance tax of 0.02%, while it also allowed losses to be carried forward for three years. Other positive measures also added fuel to the bullish trend.



Monday kicked off on a positive note as investors continued to accumulate stocks. The optimistic sentiment continued for the following session as participants awaited the second mini-budget announcement. Expectations of financial inflows from Gulf countries also supported the market. As a result the market continued to gain for five successive trading sessions by Thursday.

On Thursday, the KSE-100 scaled to a high of 547 points as soon as trading began. However, concerns over the circular debt, expected drop of Rs6.8 billion in government revenues in the wake of amendment to the finance bill, among other things put the market under pressure in midday trading.

On the other hand, interest from foreigners also propelled the market’s performance. The week-long win streak finally came to an end on Friday as the index inched lower amid volatile trading. Despite news of $1 billion inflows from UAE and receipt of the last Saudi tranche, the overall mood remained bearish. A continued drop in foreign exchange reserves, held by the central bank, also added to the selling spree.



Meanwhile, activity picked up during the week as average daily traded value surged 32% to $53 million, while volumes were up 43% to 168 million shares. Positive contributions to the index were led by commercial banks (up 559 points), oil and gas exploration companies (133 points), fertilisers (97 points), automobile assemblers (66 points), and power generation and distribution (66 points).

On the flip side, major sectors that remained under pressure were; oil and gas marketing companies (down 24 points) and insurance (15 points). Scrip-wise, top contributors were HBL (up 232 points), UBL (142 points), MCB (79 points), PPL (76 points) and HUBC (61 points).

Foreign investors accumulated $17 million this week compared to a net selling of $9.4 million last week. Major buying was witnessed in commercial banks ($11.4 million), exploration and production ($1.1 million) and fertiliser sector ($0.9 million). On the domestic front, major selling was reported by individuals ($7.4 million), banks/DFIs ($3.4 million) and insurance ($3.4 million).

Among major highlights of the week were; mini-budget aims to revive business sentiment, UAE transfers $1 billion to boost Pakistan’s liquidity reserve, money-laundering to be made non-bailable offence, IMF lowered growth forecast for Pakistan. 

Published in The Express Tribune, January 27^th, 2019.

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