PSX at new high amid privatisation talk

KARACHI:

Pakistan Stock Exchange (PSX) on Wednesday saw a U-shaped recovery, driven by multiple encouraging factors including the prime minister’s announcement to privatise state-owned enterprises (SOEs), which helped the KSE-100 index to scale new all-time highs.

Earlier, the trading session began on an optimistic note, when the market extended the previous day’s bullish momentum.

Pakistan would privatise all SOEs with the exception of strategic entities, PM Shehbaz Sharif said on Tuesday amid ongoing talks with an International Monetary Fund (IMF) mission for a fresh loan programme.

Foreign portfolio investors returned to the stock market, reflecting a significant shift in sentiment and helping the index to reach the intra-day high of 75,115.32 points.

However, the bourse entered the negative zone soon after and remained there until after midday. Later, investor interest revived in a U-shaped recovery.

Investor sentiment got a boost from data showing that the large-scale manufacturing industries’ (LSMI) output rose 2.04% in March 2024. Furthermore, the MSCI added the National Bank of Pakistan (NBP) to its Frontier Market Index.

“Stocks closed at an all-time high, led by selected blue chips on strong valuations amid plans to sell SOEs,” said Ahsan Mehanti, MD of Arif Habib Corp.

“LSMI data showing a 2% growth in March, rupee stability, finance minister’s focus on structural reforms and falling National Saving Schemes’ rates played the role of catalysts in record close at the PSX.”

At the end of trading, the benchmark KSE-100 index recorded an increase of 132.79 points, or 0.18%, and settled at 74,663.98.

Topline Securities CEO Mohammed Sohail commented that the stock market crossed a new high of 75,000 due to foreign fund buying.

“Last night in MSCI rebalancing, one company was added from Pakistan and we estimate that Pakistan’s weight will also increase, thereby having the potential to attract more passive foreign funds,” he said.

Separately, Topline Securities, in its report, noted that Pakistan equities continued their north-bound journey and crossed the 75,000 mark. However, it closed at 74,664.

Robust foreign investment in blue-chip stocks propelled the market to new record highs, it said, adding that optimism prevailed as investors reacted positively to the commencement of discussions between Pakistan and the IMF on an Extended Fund Facility (EFF) worth $6-8 billion.

The MSCI’s recent index review for May 2024 resulted in the addition of another Pakistani company, NBP, to its Frontier Market Index. In the pharmaceutical sector, Searle disclosed that its board had approved the sale of 100% shareholding control in Searle Pakistan Limited.

Key contributors to the market’s upward trajectory were Bank AL Habib, United Bank, Meezan Bank, MCB Bank and Engro Fertilisers, which collectively added 350 points, Topline said.

Arif Habib Limited (AHL), in its review, wrote that banks outperformed while other sectors consolidated recent gains.

NBP (+1.05%) was added to the MSCI Frontier Market Standard Pakistan Index, which took Pakistan’s representation to 21 stocks with a weight of approximately 3.7%.

Pakistan Bureau of Statistics reported a 2% year-on-year increase in the LSMI production, AHL added.

Overall trading volumes decreased to 572.4 million shares against Tuesday’s tally of 574.2 million. The value of shares traded during the day was Rs25.9 billion.

Shares of 382 companies were traded. Of these, 148 stocks closed higher, 213 dropped and 21 remained unchanged.

The Searle Company was the volume leader with trading in 41.1 million shares, losing Rs2.37 to close at Rs59.39. It was followed by Hum Network with 35.7 million shares, gaining Rs0.34 to close at Rs9.95 and WorldCall Telecom with 32.7 million shares, losing Rs0.04 to close at Rs1.40. Foreign investors were net buyers of shares worth Rs1.2 billion, according to the NCCPL.

Published in The Express Tribune, May 16^th, 2024.

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