Stocks soar over easing of political noise

KSE-100 index climbs 901.48 points, settles at 62,815.82

KARACHI:

Shares trading at the Pakistan Stock Exchange (PSX) on Friday reflected growing economic stability and investor confidence, which emerged as major influencing factors when political uncertainty gradually died down, leading to an increase of around 900 points in the KSE-100 index.

Moreover, the surge came as a Bloomberg report quoted a government official as saying that Pakistan had planned to seek a new loan of at least $6 billion from the International Monetary Fund (IMF) to help the incoming government repay billions of dollars in debt.

Though the index exhibited subdued trading at the outset, it swiftly started rising and stood at elevated levels at midday amid some fluctuations. The market touched its intra-day high of 62,945.37 points about half an hour before close, apparently driven by the IMF spokesperson’s assertion that the fund was looking forward “to working with the new government” of Pakistan.

“Stocks closed sharply higher after Punjab MPAs were sworn in which reduced political noise, and the IMF’s affirmation of working with Pakistan’s new government to ensure macroeconomic stability,” said Arif Habib Corp MD Ahsan Mehanti.

“Reports saying the new government will likely seek at least $6 billion in a new IMF programme and negotiate the Extended Fund Facility to avert economic crisis played the role of catalysts in bullish close of the market.”

At close, the benchmark KSE-100 index recorded impressive gains of 901.48 points, or 1.46%, and settled at 62,815.82.

Topline Securities observed in a report that continuing its momentum, the KSE-100 index gained 901 points. “This positivity can be attributed to the start of the process of forming a provincial government as the Punjab Assembly held its first session,” it said.

Similarly, the Sindh Assembly will hold its session on Saturday where the elected representatives will take oath. These developments boosted investor confidence as things were moving smoothly towards political stability, Topline said.

“News that Pakistan intends to seek at least $6 billion from the IMF to repay the debt due this year and the IMF’s statement that it intends to work with the new government to help in macroeconomic stability provided further stimulus to the market,” it added.

Arif Habib Limited (AHL) wrote in its report that the PSX witnessed a strong close to the week through initial resistance at 62k. “Week-on-week, the KSE-100 index gained 5.04% as political temperature cooled down,” it said.

Oil and Gas Development Company (+7.5%), Pakistan Petroleum (+4.61%) and Meezan Bank (+3.74%) contributed the most to the index’s gains.

Habib Bank (+0.73%) announced results for 4QCY23 where it posted earnings per share of Rs10.12, up 39% year-on-year and 11% quarter-on-quarter. It declared a dividend of Rs4 per share, taking total CY23 payout to Rs9.75 (CY22 – Rs6.75).

The jump in earnings came mainly on the back of growth in total revenue, AHL said. It anticipated that in the coming week, the index level may reach closer to 63-64k, which would close the gap that had emerged following elections.

JS Global analyst Mohammed Waqar Iqbal noted that the bourse continued with its positive momentum. The KSE-100 closed the day with gains of 901 points.

“We expect the uptrend to continue and recommend investors to view any downtrend as an opportunity to buy stocks in the banking, cement and exploration and production sectors,” the analyst added.

Overall trading volumes increased to 377.97 million shares against Thursday’s tally of 324.8 million. The value of shares traded during the day was Rs16 billion.

Shares of 339 companies were traded. Of these, 201 stocks closed higher, 118 dropped and 20 remained unchanged.

Kohinoor Spinning was the volume leader with trading in 36.2 million shares, gaining Rs1 to close at Rs4.59. It was followed by K-Electric with 26.5 million shares, gaining Rs0.19 to close at Rs4.39 and Yousuf Weaving with 16.7 million shares, gaining Rs0.74 to close at Rs4.12.

Foreign investors were net buyers of shares worth Rs626.8 million, according to the NCCPL.

Published in The Express Tribune, February 24^th, 2024.

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