PSX up 4.8% in record-breaking spree

Pakistan retains position as world's best market in terms of US dollar returns

KARACHI:

Pakistan Stock Exchange (PSX) achieved a historic milestone during the outgoing week as the KSE-100 index surged 4.8% and closed at a record high of 114,302 points.

Average daily traded value during the week reached an unprecedented Rs60 billion, which led to the index's year-to-date return of 83%.

Investor optimism was fueled by expectations of an interest rate cut in the upcoming monetary policy meeting and strong economic indicators, including a 29% year-on-year (YoY) rise in remittances to $2.9 billion in November.

The market also benefited from declining yields in T-bill auctions, increased auto sales and improved banking sector performance.

Sector-wise, oil and gas exploration, fertiliser and technology led the gains, where stocks like Mari Petroleum and Fauji Fertiliser Company (FFC) made significant contributions.

Despite foreign outflows of $0.9 million, local fund buying bolstered the market. Pakistan retained its position as the world's top-performing market in terms of US dollar returns for the second consecutive week.

On a day-on-day basis, the PSX on Monday surged to a record high as the KSE-100 index gained over 900 points to 108,897, powered by extensive institutional buying and widespread optimism about policy rate reduction in the upcoming monetary policy announcement.

Next day, the market saw a volatile session, when the index lost nearly 1,100 points amid global equity sell-offs, Middle East tensions, weak remittances data and concerns over tax shortfalls, low oil prices and unresolved IMF targets under the $7 billion Extended Fund Facility.

After a brief pause, the PSX rebounded sharply on Wednesday, surging over 1,900 points to a record high. Investor optimism was driven by expectations of policy rate cut following a drop in inflation to 4.9%, the lowest in six years. The following day, the bourse reached new heights and surpassed 114,000 points, fuelled by investor enthusiasm and economic optimism. Expectations of a dovish monetary policy and abundant market liquidity boosted confidence.

On Friday, the PSX saw a volatile session with the index swinging over 2,500 points before closing up 0.11% at a record high.

The market closed at 114,302, significantly up by 5,248 points, or 4.8% week-on-week.

"PSX reached a new milestone as the weekly average traded value hit an all-time high of Rs60 billion for the week ended December 13, 2024. The KSE-100 index surged 4.8% during the week, closing at a record high of 114,302 points," wrote AHL in its report. According to the research house, the benchmark index delivered an impressive return of 83% in CY24. The market remained buoyant throughout the week, crossing the 115k mark. The bullish momentum prevailed amid positive economic indicators coupled with expectations of rate cut in the upcoming monetary policy committee meeting, AHL mentioned.

On the economic front, remittances increased 29% YoY to $2.9 billion in November. Moreover, the National Savings Schemes' rates were slashed for all certificates.

Furthermore, automobile sales depicted a significant jump of 52% YoY in November. The banking sector's advances-to-deposit ratio (ADR) increased to 47.8% in November compared to 44.3% in October.

Also, T-bill yields for three, six and 12-month tenors were reduced by 100 basis points (bps), 89 bps and 5 bps, respectively (hovering at 2022 levels). Meanwhile, the SBP's foreign currency reserves climbed up $13 million to $12.1 billion.

"Pakistan continues to be the world's best-performing market in terms of US-based returns for the second consecutive week," AHL said. Sector-wise, positive contribution came from oil and gas exploration (3,175 points), fertiliser (1,767 points), oil and gas marketing companies (589 points), cement (432 points), and technology and communication (403 points).

Meanwhile, the sectors that contributed negatively were commercial banks (2,292 points), automobile parts (18 points), and cable and electrical goods (16 points).

Stock-wise, positive contributors were Mari Petroleum (1,921 points), FFC (1,193 points), OGDC (592 points), Pakistan Petroleum (585 points), and PSO (420 points).

Meanwhile, negative contributors included UBL (465 points), Meezan Bank (392 points), Bank AL Habib (350 points), MCB Bank (329 points) and HBL (232 points).

Foreigners' selling continued during the week under review, which came in at $0.9 million compared to net selling of $14.2 million last week. On the local front, buying was reported by funds ($40.9 million).

Average volumes arrived at 1,362 million shares (down 19.1% WoW) while average traded value settled at $218 million (up 10.2% WoW), AHL added. JS Global analyst Wadee Zaman wrote, in his report, that bullish momentum persisted for the KSE-100 index and average daily turnover increased 10% WoW to $218 million.

In the recent T-bill auction, the government raised Rs1,256 billion against the target of Rs1,200 billion, with yields decreasing up to 100 bps across different tenors, he said.

During the week, the federal cabinet approved settlement agreements with eight bagasse-fired independent power producers, which was expected to result in a reduction in electricity prices, the analyst added.