Stocks surge on Saudi deal hopes

Benchmark KSE-100 index gains 619.79 points, settles at 70,909.90

KARACHI:

Pakistan Stock Exchange (PSX) on Friday snapped a three-day losing streak and notched up significant gains as the KSE-100 index reached a historic high above 70,900 with a surge of 620 points.

In the morning, trading was shadowed by the escalating Middle East crisis following news reports saying that Israel had carried out a drone attack on Iran, which caused panic among investors. However, the market recouped all the losses soon.

The State Bank of Pakistan’s (SBP) weekly data showing stable foreign currency reserves kept investor sentiment positive. A major trigger was the anticipated deal with Saudi Arabia for a minority stake in Pakistan’s Reko Diq copper and gold mining project.

Moreover, Finance Minister Muhammad Aurangzeb’s quest for foreign investment and funding from global lenders encouraged market players to keep the index in the green.

The bourse gained further momentum later in the day when it touched the intra-day high of 70,968.98 points towards the close of trading.

“PSX reached fresh record highs, led by blue-chip stocks on speculation in the earnings season amid strong results in fertiliser and banking sectors, and the IMF’s affirmation of a successful final review of the current programme,” said Ahsan Mehanti, MD of Arif Habib Corp.

“A surge in global crude oil prices amid geopolitical tensions, the finance minister ruling out a significant devaluation and rupee recovery played the role of catalysts in record close of the market.”

At close, the benchmark KSE-100 index recorded impressive gains of 619.79 points, or 0.88%, and settled at 70,909.90.

Topline Securities, in its report, stated that bulls dominated the day as the KSE-100 index gained 620 points to close at 70,910.

“This positivity can be attributed to news that Saudi Arabia is moving closer to a potential deal to acquire minority stake in a Pakistan mine controlled by Barrick Gold,” reflecting recent reports that hinted at Saudi interest in pouring investment into Pakistan, it said.

The increase in SBP’s reserves by $14.4 million to $8.05 billion, despite repayment of $1 billion Eurobond, also boosted investor sentiment.

Major contributors to the index were Meezan Bank, Hub Power, Engro Fertilisers, Bank AL Habib and Oil and Gas Development Company, Topline added.

Arif Habib Limited (AHL) wrote that it was another solid week for Pakistan equities’ market, which closed at an all-time high and recorded a 0.8% week-on-week (WoW) rise.

“Thursday’s test of 70k support and a higher reaction showed the KSE-100’s trend to move towards the weekly high at 71k,” it said.

Hub Power (+2.97%), Engro Fertilisers (+2.1%) and Meezan Bank (+1.68%) were the biggest contributors to the index gains. On the other hand, Systems Limited (-0.83%), Fatima Fertiliser (-3.6%) and International Steels (-2.86%) were the largest drags.

DG Khan Cement (-0.06%) reported earnings per share (EPS) of Rs5.1 for 9MFY24, up 6% year-on-year and beating expectations of a loss per share in Q3 with an EPS of Rs2.69.

It pointed out that the government was set to speed up the process of deregulating petroleum products. Under the new framework, Ogra and the Competition Commission would play a more significant role in ensuring product quality and availability, and fostering a competitive environment to prevent market collusion.

“Attock Refinery (+4.56%), situated in the northern region, is anticipated to capture a major portion of freight charges via IFEM (inland freight equalisation margin) collected by other oil marketing companies to deliver fuel in the demand centre (Punjab),” AHL added.

JS Global analyst Muhammad Shuja Qureshi said that after a weak start, bulls took control of the stock market, taking the KSE-100 index to 70,910, up 620 points day-on-day. Once again, auto and refinery sectors led the rally.

Sazgar Engineering Works announced stellar earnings, which took the stock to its upper circuit at close. Honda Atlas Cars and Dewan Farooque Motors also ended the day at their respective upper locks, the analyst added.

Overall trading volumes increased to 475.8 million shares against Thursday’s tally of 440.3 million. The value of shares traded during the day was Rs23.2 billion.

Shares of 370 companies were traded. Of these, 200 stocks closed higher, 149 dropped and 21 remained unchanged.

Pakistan Refinery was the volume leader with trading in 49.7 million shares, gaining Rs0.82 to close at Rs30.09. It was followed by Cnergyico PK with 26.8 million shares, losing Rs0.08 to close at Rs4.47 and Kohinoor Spining Mills with 22.8 million shares, gaining Rs0.1 to close at Rs4.96.

Foreign investors were net buyers of shares worth Rs1.58 billion, according to the NCCPL.

Published in The Express Tribune, April 20^th, 2024.

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