KARACHI: The Pakistan Stock Exchange continued to remain under pressure as tensions over the economic scenario and a lack of positive triggers pushed the index down by 1% or 401 points in the outgoing week.
The ongoing uncertainty over talks with the International Monetary Fund (IMF) made investors jittery, who resorted to profit-booking and stayed on the sidelines. Moreover, poor corporate earnings and Moody’s announcement of downgrading the banking sector’s outlook to ‘B3 negative’ further dented sentiments.
The week kicked off on a sour note as the KSE-100 index lost over 500 points due to mounting selling pressure. However, the market took a turnaround in the following session and notched up gains as news of the Saudi crown prince’s visit raised investors’ confidence. Unfortunately, the trend could not be sustained and the index shed points after a statement from IMF resident representative Teresa Sanchez. Sanchez stated that Pakistan must take steps to curtail circular debt, increase tax revenue and adopt a market-based flexible exchange rate in order to ease its macroeconomic concerns. The following two sessions also saw the index drop. Matters were further aggravated as a militant attack in Indian occupied Kashmir kept the market rangebound.
“Moreover, investors will eye the Saudi Arabia Crown Prince visit over the weekend, which is anticipated to be followed by multiple investment deals/MoUs worth $10-20 billion, as per media outlets,” stated a Topline Securities report.
Participation slowed as average volumes dropped 29% week-on-week to 136 million shares, whereas value traded declined 28% to $45 million.
In terms of sectors, negative contributions came from commercial banks (down 128 points) as Moody’s downgraded ratings of Pak banks, oil & gas marketing companies (86 points), fertiliser (70 points), tobacco (45 points), and automobile assemblers (40 points).
On the flip side, sectors that contributed positively include oil & gas exploration companies (up 70 points), and cements (17 points). Scrips that dragged the index down were HBL (74 points), PSO (64 points), PAKT (45 points), BAHL (29 points) and PSEL (26 points).
Foreign buying continued this week clocking-in at $12.1 million compared to a net buy of $12.2 million last week. Major buying was witnessed in Cement ($5.8 million) and commercial banks ($2.9 million). On the local front, selling was reported by broker proprietary trading ($6.3 million) followed by companies ($4.7 million).
Major highlights of the week were; reserves increased by $11 million to $14.9 billion, Pakistan meets all FATF requirements, $20 billion Saudi investment likely, trade deficit down by $2 billion in July-January period, remittances increased 12.22% to $12.8 billion in seven months, and Moody’s changed banking system outlook to B3 negative.
Published in The Express Tribune, February 17th, 2019.