KARACHI: Bulls maintained their control at the stock exchange for the third consecutive week as the benchmark KSE-100 index gained over 1,600 points, which helped lift the market to a seven-month high.
The rise came primarily on the back of a successful International Monetary Fund (IMF) review of Pakistan’s economy, which set the tone for the outgoing week.
On the other hand, the easing of political noise in the capital city lent further support to the index as investors heaved a sigh of relief. The Jamiat Ulema-e-Islam-Fazl (JUI-F) called off its 13-day-long sit-in in order to press ahead with its Plan B.
“The easing of political noise after the end of sit-in by the JUI-F and expected departure of former premier Nawaz Sharif abroad for medical treatment kept sentiment upbeat at the stock market,” stated Arif Habib Limited in its report.
The benchmark KSE 100-share Index gained 1,606 points, or 4.5%, to close at 37,584 points in the week ended on November 15, 2019.
The beginning of the week saw the KSE-100 index skyrocket nearly 900 points owing to a positive quarterly review of Pakistan’s economic indicators by an IMF team coupled with encouraging announcement by the MSCI towards the end of the previous week, which kept Pakistan in the Emerging Market Index.
Earlier in November, a staff-level IMF mission visited Pakistan to review the economy’s performance in order to pave the way for disbursement of the second loan tranche of about $450 million.
Pakistan also averted its placement in the MSCI Frontier Market Index and remained in the Emerging Market Index, which provided much-needed boost to the bourse.
On Tuesday, the KSE-100 snapped its eight-session winning streak due to the absence of major positive triggers to guide the market. Moreover, the excitement over earlier triggers (the IMF review and the MSCI announcement) subsided.
The remaining sessions saw the KSE-100 index rebound and post gains largely due to the easing of rules for exporters by the central bank and upbeat trade data.
The State Bank of Pakistan lifted the ban on advance payment of up to $10,000 per invoice for the import of goods and services to facilitate small and medium-sized importers (cum exporters).
Besides, it also enhanced the financing limit for exporters under subsidised loan schemes including the Export Finance Scheme and Long Term Financing Facility.
In addition to these, data from the Pakistan Bureau of Statistics showed a 33.5% contraction in trade deficit in first four months of the current fiscal year 2019-20, which helped the market close the week with substantial gains.
Investor participation continued to rise in the stock market as average daily traded volumes jumped 21% week-on-week to 311 million shares while average daily traded value rose 17% to $64 million.
In terms of sectors, positive contribution came from commercial banks (430 points), power generation and distribution companies (203 points), cement producers (133 points), exploration and production firms (127 points) and oil marketing companies (101 points). Negative contribution was led by tobacco firms (33 points).
Among individual stocks, major gainers were Hubco (156 points), HBL (103 points), Bank AL Habib (93 points), Engro (56 points) and TRG Pakistan (55 points).
Foreign investors were net buyers of $4.2 million worth of shares during the week under review compared to net selling of $4.5 million last week. Buying was witnessed in fertiliser companies ($5.1 million) and commercial banks ($3.8 million).
On the domestic front, major selling was reported by banks and development finance institutions ($18.8 million) and insurance companies ($9.6 million)
Among other highlights of the week were foreign investment in government securities surpassing $722 million so far in the current fiscal year, disbursement of 37% of development funds by the government and approval of another power tariff hike to secure IMF’s loan tranche.
Published in The Express Tribune, November 17th, 2019.
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