PSX tumbles on dismal data, economic gloom

KARACHI:

Pakistan Stock Exchange (PSX) on Monday registered a sharp decline of nearly 580 points, driven by dismal economic data showing a $270 million current account deficit for May 2024 and tough tax measures against exporters in the federal budget for FY25.

Earlier, trading began on a positive note, with the KSE-100 index reaching the intra-day high of 79,388.11 points. However, the early momentum quickly evaporated as the market plummeted.

The downturn was primarily fueled by the unresolved issues such as the Rs5.3 trillion worth of circular debt and the outstanding dues of billions of rupees payable to the Chinese independent power producers (IPPs).

Also contributing to the decline was the International Monetary Fund’s (IMF) backing of Pakistan’s strict economic measures in the 2024-25 budget, which added to investor concerns. Additionally, the banking sector faced significant profit-taking throughout the session.

The market fell below the crucial 79,000 mark and touched the intra-day low of 78,167.43 points towards the close of trading. It ended trading near the day’s low with significant losses.

“Stocks closed sharply lower on dismal data showing a $270 million current account deficit for May 2024 and tough tax measures against exporters in the FY25 budget,” said Ahsan Mehanti, MD of Arif Habib Corp.

“Concerns over the unresolved Rs5.3 trillion circular debt and uncertainty about the rollover of $15 billion in Chinese IPPs’ dues played the role of catalysts in bearish close at the PSX.”

At the end of trading, the benchmark KSE-100 index recorded a substantial decline of 578.40 points, or 0.73%, and settled at 78,232.10.

Topline Securities, in its report, stated that on the news front the IMF commended Pakistan for its stringent economic measures in the 2024-25 budget.

“Banking sector witnessed profit-taking where United Bank, Meezan Bank, Bank AL Habib, Bank Alfalah and Faysal Bank cumulatively contributed 345 points to the decline in the index,” it said, adding that Hub Power continued its positive momentum as Mega Motors Company, a subsidiary of Hub Power, entered into a new line of business in electric vehicles with BYD Auto Industry Company Limited.

Arif Habib Limited (AHL), in its commentary, wrote that Monday saw a decline in the KSE-100 following last week’s test of the 80,000 level. Hub Power (+4.33%) provided the largest upside contribution, it said.

JS Global analyst Mohammed Waqar Iqbal noted that the stock market began the day on a positive note, but bears soon took charge. “We advise investors to view any dips as a buying opportunity, particularly in cement, steel and tech stocks,” the analyst added.

Overall trading volumes decreased to 385.2 million shares against Friday’s tally of 471.3 million. The value of shares traded during the day was Rs15.45 billion.

Shares of 432 companies were traded. Of these, 122 stocks closed higher, 254 fell and 56 remained unchanged.

Pervez Ahmed Company was the volume leader with trading in 46.8 million shares, gaining Rs0.27 to close at Rs2.11. It was followed by WorldCall Telecom with 20.8 million shares, remaining unchanged at Rs1.27 and Hub Power with 20.1 million shares, gaining Rs6.85 to close at Rs165.14.

Foreign investors were net sellers of shares worth Rs99.6 million, said NCCPL.