PSX enters recovery mode, touches new peak

KARACHI:

Pakistan Stock Exchange (PSX) experienced a revival of investor interest during the short three-day trading week, where bulls staged a comeback and pushed the KSE-100 index to an all-time high above 80,000 points.

The surge was fueled by investor optimism following a much-awaited loan agreement with the International Monetary Fund (IMF).

Activity at the bourse surged on Monday when the index soared to an all-time high with gains of over 1,200 points and settled at 81,155.61, driven by the agreement with the IMF over a $7 billion Extended Fund Facility (EFF) and the corporate earnings season.

Following a two-day public holiday, the KSE-100 index maintained its bullish momentum on Thursday, reaching a new peak above 81,800 points, as investors were enthused by Fitch Ratings’ projections of a reduction in the State Bank of Pakistan (SBP) policy rate to 14% and an increase in economic growth to 3.2%.

However, things took a U-turn on Friday in the wake of political instability and the market registered a plunge of more than 1,700 points following the Supreme Court’s (SC) verdict on elections for reserved seats, which limited the government’s constitutional powers.

The benchmark KSE-100 index closed the week at 80,118 with a slim increase of 174 points, or 0.22% week-on-week (WoW).

Topline Securities, in its review, said that the KSE-100 index soared to the highest-ever close of 81,840 points during the outgoing week on Pakistan’s successful negotiations with the IMF for a $7 billion facility.

However, some profit-taking was observed on the last trading session of the week on account of increase in political noise where the government expressed its strong displeasure over the reserved seats verdict in favour of the opposition, it said.

Among other developments, the large-scale manufacturing (LSM) index for May 2024 posted a growth of 7.3% year-on-year (YoY) and 7.5% month-on-month (MoM), pushing 11MFY24 index up by 1% YoY.

Trade numbers for June 2024 showed that Pakistan’s exports reached $2.6 billion, up 9% YoY but down 10% MoM, while imports stood at $4.98 billion, up 19% YoY and 1% MoM. Current account for June recorded a deficit of $329 million, taking FY24 deficit to $681 million.

Average daily traded volumes and value for the week came in at 464 million shares and Rs26.8 billion, respectively, Topline added.

JS Global analyst Wadee Zaman wrote in his report that the KSE-100 touched an all-time high during the week on the back of optimism emerging from the staff-level agreement with the IMF.

The index, however, underwent correction during the last trading session and recorded a 2.1% decline in a single day, he said.

Arif Habib Limited (AHL), in its report, observed that the market showed a positive momentum, driven by the staff-level agreement for a new 37-month Extended Fund Facility of $7 billion.

“This pushed the index to an all-time high of 81,839 points on Thursday,” it said, adding that “political noise wiped off most of the gains made during the week, resulting in the index shedding points on the last working day”.

On the economic front, the current account deficit narrowed 79% to $0.7 billion in FY24 – the lowest in 13 years. Pakistani rupee appreciated against the US dollar by Rs0.27, or 0.1%, to Rs278.13.

Sector-wise, the notable positive contributors were exploration and production (207 points), technology and communication (103 points), fertiliser (83 points), cement (83 points) and automobile parts (57 points).

Sectors that contributed negatively were power (249 points), tobacco (51 points), engineering (47 points), pharma (45 points) and banks (41 points).

Foreign investors bought shares worth $9.3 million during the week under review compared with net buying of $4 million in the previous week, AHL added.