Experts see positive trend returning to PSX next week

foreign investors would return to domestic debt market once world successfully overcomes spread of the coronavirus

KARACHI: Pakistan stock and money markets' pundits, who are believed to be the heavyweights and trendsetters, appeared cautiously optimistic regarding extension in the slight recovery seen in closing hours at the domestic asset markets over the weekend -- Friday.

Earlier, the stock market crashed again and again and got temporarily suspended three times during the outgoing week as per the laws. This has never happened in the history. Similarly, the rupee lost against the US dollar for the first time in the past eight months.

The outgoing week saw the KSE-100 dive 2,159 points or 5.65% to finish at 36,061.

Arif Habib Limited Chairman Arif Habib and AKD Group Chairman Aqeel Karim Dhedhi said new cases of the virus-infected people could continue to emerge around the globe, including Pakistan. They, however, see return of positive trend on Monday and onward.

"The stock market may see positive trend on Monday while rupee would fluctuate but maintain around the current level," Habib anticipated while talking to The Express Tribune.

Stocks would continue to recover as suggested by the trend seen in closing hours on Friday. "Stocks had been oversold. They had steeply fallen to the levels where renewed buying is due. The market is expected to see return of positive trend ahead of the monetary policy announcement in which the market is expecting a 50-100 basis points cut in the benchmark interest rate.

"Moreover, the 30% steep fall in international oil prices is very much positive for the Pakistan's economy while domestic economy is not based on aviation and tourism industries which are the major affected industries of the plunge in the oil prices in the global economy," he said.

Dhedhi said: "We may continue to see foreign selling at stocks and debt markets (T-bills and Pakistan Investment Bonds/PIBs) as we cannot tie their hands. However, local financial institutions are having huge funds in hands to buy shares and they are expected come up to capitalise profits since the shares had fallen to renewed buying levels."

Foreigners have pulled out over $1 billion from debt market mostly in the past one-month due to the virus concerns. The outflow comes to around one-third of the total investment of around $3.49 billion they had made since July 2019.

"The investors may withdraw another $200-400 million in the days and weeks. However, trend in the rupee in closing hours on Friday suggested the panic foreign investors have already gotten exit from Pakistan while others would opted to stay here," Dhedhi said.

Earlier, several experts have anticipated the rupee would maintain below Rs160 to the US dollars. The experts include AHL Head of Research Samiullah Tariq and Exchange Companies Association of Pakistan (ECAP) former general secretary Zafar Paracha.

On the flip side, Habib said, Pakistan may face hardship in achieving the set target of exports of around $25-26 billion while dollar inflow on account of workers remittances may also slow down this fiscal year due to likely recession in the global economy.

"Pakistan would be a net-net beneficiary in the oil tumbling global economy," he reiterated.

Experts said foreign investors would return to the domestic debt market once the world successfully overcomes the spread of the coronavirus.

The Pakistani rupee recovered Rs0.16 to Rs158.97 to the US dollar on Friday. It had lost Rs4.73, or around 3%, in the prior four days to Rs159.13 by Thursday's close in the inter-bank market.