Stock market posts lackluster movement

The week ended on March 08, 2024 started on a positive note, with the index gaining 1% on the opening day. However, as the week progressed, profit taking activities ensued, losing some of the initial gains. Nonetheless, by the week's end, the benchmark index managed to maintain an upward momentum, closing at 65,326 points with a gain of 468 points or 0.7%WoW.

With new Prime Minister taking office and issuing immediate directives focusing on engaging with the IMF and addressing privatization matters set an initial positive impetus. With new setup in place the IMF started rolling out new recommendations and is poised to unveil more with the appointment of the finance minister.

Government’s next major task will be to smoothly navigate the second review of the SBA. IMF’ team is scheduled to visit following the formation of the new cabinet, as SBA program is set to expire in April 2024.

The recent decline in cut-off yields for 3-month papers in last T-bill auction hints volatility, suggesting that some players anticipate a rate cut in the upcoming Monetary Policy Committee meeting on March 18.

Remittances for February totaled US$2.25 billion, up 13%YoY and with trade deficit of US$1.7 billion for the month.

Market participation remained subdued, with the daily traded volume averaging 412 million shares as compared to 418 million shares in the earlier week, down 1.6%WoW.

On the currency front, rupee held its ground against the greenback, closing at PkR279.04/US$.

Other major news flows during the week included; 1) Jul-Jan debt during first seven months of the current financial year rose by 6 percent, 2) SBP injected PKR8 trillion to ease liquidity crunch, 3) Bank deposits surged nearly 21%YoY in February on record-high interest rates and remittances, 4) cement dispatches in February fall 19% to 3.26 million tons, and 5) Textile exports hit US$1.41 billion in February, up 20%YoY.

Sector-wise, Transport, Refinery, and Inv. Banks/ Securities cos. were amongst the top performers, while Tobacco, Modarabas, and Textile weaving were amongst the worst performers.

Major net selling was recorded by Companies with a net sell of US$6.8 million. Foreigners absorbed most of the selling with a net buy of US$6.3 million.

Top performing scrips of the week were: NRL, DAWH, CNERGY, PAEL and PSX, while the laggards included: SML, FCEPL, PAKT, MEBL and SHFA.

The upcoming MPC meeting will remain in the limelight. With prevailing consensus of the status quo, the market is likely to remain largely unaffected as this expectation is already priced in. However, if there is any surprise cut, it could unlock funds towards debt-heavy cyclical sectors.

The imminent announcement of the federal cabinet in the coming week holds significance, with progress on the IMF's SBA third tranche as a near-term focal point and a potential positive in sight.

Pakistan Stock Exchange gains 531 points

The week ending January 26, 2024 started on a positive note, riding the wave of optimism generated by the IMF's favorable review report. The benchmark index closed the week with gains of 531 points at 63,812.

Following this upbeat start, the E&P sector took center stage over developments on clearance of circular debt amounting to PKR1.2 trillion.

As the week drew to a close, conflicting narratives emerged, creating uncertainty around the viability of the circular debt plan. News reports, citing insiders, presented divergent stories—one suggesting the imminent presentation of the plan to the IMF and another reporting objections raised by the Finance Ministry. This uncertainty contributed to corrections observed in the last two trading days, with the likelihood of rate cuts diminishing.

Although discussions around rate cuts gained traction with reduction in cut-off yields in the last T-bills auction, the specter of persistent inflation, projected at 28% for Jan’23, tempered expectations of any rate cut.

The foreign exchange reserves held by State Bank of Pakistan witnessed a weekly increase of US$243 million. The inflow of US$700 million from the IMF was constrained by debt repayments.

Market participation remained cautious due to uncertainties surrounding the circular debt plan and the impending Monetary Policy Committee stance, with average daily traded volume exhibiting a decline of 16%WoW at 392 million shares from 467 million shares in the earlier week.

Other major news flows during the week included: 1) Pakistan and Kuwait to set up US$1 billion fund and 2) Cabinet body set to okay brown-field refinery policy.

Textile Composite, E&P, and Leather & Tanneries companies were amongst the top performers, while Automobile parts & Accessories, Transport, and Property were amongst the worst performers.

Major net selling was recorded by Foreigners with a net sell of US$22.7 million. Insurance absorbed most of the selling with a net buy of US$9.6 million.

Top performers of the week were: OGDC, ATLH, APL, LCI, and HMB, while top laggards included: HCAR, PTC, GADT, JVDC, PIBTL.

Market outlook hinges significantly on interest rate move scheduled to be announced on Monday January 29. While the status quo has already been factored into the market expectations, any surprise rate cut could likely trigger an immediate rally.

The resolution of the circular debt clearance plan in the upcoming week is anticipated to provide clarity to market participants, especially in the context of E&P stocks.

As the elections draw near, the settling dust is indicative of stabilization and with successful completion is anticipated to inject positive momentum into the market.

Investors are advised to seize every opportunity for the accumulation of blue-chip stocks.

 

Pakistan Stock Exchange benchmark index gains 1,261 points to close at 47,494 level

Pakistan Stock Exchange (PSX) remained positive throughout the week ended on October 06, 2023. The benchmark index gained 1,261 points to close at 47,494 level.

In a meeting with the Senate Standing Committee on Finance, Dr. Shamshad Akhtar made a promising statement that the caretaker government will deliver on the IMF program to secure US$700 million under the SBA. 

Pakistan is also seeking foreign investments from Saudi Arabia in Reko Diq’s copper and gold mining projects while companies like OGDC, PPL, and GHPL are contemplating on selling their partial or full stakes in an attempt to boost the country’s foreign exchange reserves.

As of September 28, 2023, foreign exchange reserves held by State Bank of Pakistan (SBP) declined by US$21 million to US$7.62 billion, while country’s total foreign exchange reserves were reported at US$13.03 billion.

International oil prices of Brent and WTI were on a steady decline and closed at US$83.88/barrel and US$82.08/barrel, which was reflected in the latest revision in local petrol and HSD prices.

Trade deficit for September 2023 was reported at US$1.49 billion, down by 30%MoM when compared to US$2.1 billion in August 2023.

CPI rose to 31.4% in September 2023 when compared to 27.4% in August 2023, amidst higher fuel prices and a lower base last year.

Overall, average trading volumes was reported at 291 million shares as compared to 202 million shares a week ago.

Other major news flows during the week included: 1) Government debt hit historic high of PKR 64 trillion by August end, 2) Foreign debt ratio exceeded 38% of total public debt in FY23, 3) September 2023 cement dispatches decline by almost 4%YoY, 4) Cotton arrivals rose by 29% but Punjab faced setback, 5) Money supply shrank by 1.3% in Q1 as cash holdings drop, 6) A 50bps hike in policy rate added PKR300 billion to domestic debt, 7) SBP mopped up PKR104.8 billion through PIB auction, and 8) Textile exports declined 12% to US$1.35 billion in September 2023.

Engineering, Refinery, and Cable & Electric goods were amongst the top performing sectors, whereas, Synthetic & Rayon, Vanaspati & Allied Industries, and Close end mutual funds were amongst the worst performers.

Major net selling was recorded by Brokers (US$3.48 million) and Mutual Funds (US$0.2 million). Banks and Companies absorbed most of the selling with a net buy of US$13.6 million and US$2.1 million respectively.

Top performers during the week included: KEL, ISL, AGP, CNERGY, and PGLC, while top laggards were: JDWS, PSEL, IBFL, THALL, and HINOON.

Going forward, the market's performance is anticipated to be significantly influenced by the upcoming IMF review scheduled for November.

Regarding the political landscape, while the expected timeline for elections is given, providing exact dates for the elections would be a positive development.

Additionally, upcoming inflation readings and current account data would remain in the limelight.

Overall, analysts continue to advise investors to remain cautious while investing and consider companies with strong fundamentals and high dividend-yielding companies.

 

 

Pakistan Stock Exchange closes almost flat

The market remained lackluster throughout the week ended on September 28, 2023.

Despite the visit of the Caretaker Prime Minister to the UN, no significant positive developments or outcomes were observed.

On the macroeconomic front, the federal government is intensifying its efforts to reduce spending following a recommendation from the World Bank, aiming to simultaneously increase revenues. The news flows indicated a possible reduction in the PSDP spending.

 Inflation for this month is still expected to remain high, around 30%YoY. Meanwhile, the Pakistani rupee continues to strengthen against the greenback, posting a weekly gain of 1.4% to close at PKR287.7/US$ by week-end.

Internationally, oil prices have resumed their upward trend, amid supply crunch, after a brief easing earlier in the week, with Brent crude currently hovering at US$95.6 per barrel.

Overall, average trading volumes improved by 45.6%WoW rose to 202 million shares as compared to 139 million shares traded in the earlier week.

The benchmark KSE-100 Index lost 189 points during the week, depicting a 0.4% decrease in the index.

Other major news flows during the week included: 1) profit repatriation surged by 74% in July-August, 2) Jul-Aug period borrowing from multiple financing sources rose to US$3.206 billion, 3) RDA inflows reported at US$6.6 billion for August, 4) CGS of KSA Armed Forces met President, and 5) Pakistan owed US$1.2 billion to Chinese power producers.

Transport, Tobacco, and Paper & Board were amongst the top performing sector. Vanaspati and allied industries, Technology and Textile were amongst the worst performing sector.

Major net selling was recorded by Banks with net selling of US$6.3 million. Individuals and companies absorbed most of the selling with a net buy of US$3.7 million and US$1.4 million, respectively.

Top performing scrips of the week were: EFUG, PGLC, CEPB, NRL, and PAKT, while top laggards were: POL, GADT, SYS, FFBL, and HBL.

Looking ahead, the market's performance is anticipated to be significantly influenced by the upcoming IMF review scheduled for November.

Regarding the political landscape, while the expected timeline for elections is given, providing exact dates for the elections would be a positive development.

Upcoming inflation readings and current account data would remain in the limelight. Overall, we continue to advise our investors to remain cautious while investing and consider companies with strong fundamentals and high dividend-yielding companies.

PSX benchmark index gains 1.5%WoW

Pakistan Stock Exchange remained range-bound during the week ended on September 08, 2023, with the benchmark index KSE-100 marginally fluctuating in the slim range of 654 points. The fear of interest rate hike due to the increase in the T-Bills yields kept the market activity in check. However, positive developments over SIFC and the caretaker prime minister’s announcement of total expected inflows of US$50 billion from UAE and Saudi expected to materialize in the next 4-5 years added a substantial layer of positivity to this multifaceted narrative.

The KSE-100 index closed at 46,013 points with a gain of 1.55%WoW. Meanwhile, market participation declined by 26%WoW, averaging at 138 million shares. On the currency front, rupee strengthened against the greenback. Moreover, administrative measures yielded positive results, taking the gap between interbank and open market below 1% which was around 5% a week ago.

August trade deficit widened by 29.8%MoM to US$2.126 billion as compared to US$1.637 billion in July.

The foreign exchange reserves held by the State Bank of Pakistan (SBP) by US$70 million to US$7.8 billion as of September 01, 2023.

Other major news impacting the market include: 1) August 2023 petroleum sales declined 8%YoY to 1.41 million tons, 2) August cement dispatches rose by 37%YoY to 4.518 million tons, 3) Pakistan’s public debt surged 22% to PKR61.75 trillion in July and 4) IMF allowed leeway on electric bills, raises gas prices by 50%.

Sector-wise, Close-End Mutual Fund was the worst performer, while Transport, Automobile Parts & Accessories & Inv. banks/ Securities cos. were amongst the top performers.

Flow-wise, major net selling was recorded by Mutual Funds with a net sell of US$2.4 million. Individuals absorbed the selling with a net buy of US$3.6 million.

Top performing scrips were: GADT, DAWH, ILP, THALL, KAPCO, while the Laggards included: JWDS, ARPL, BAHL, EFUG and INDU.

Going forward, market is expected to remain range-bound due to the upcoming Monetary Policy Committee meeting on September 14, 2023.

Furthermore, government’s steps over energy reforms, and next review with the IMF may improve the market sentiments.

Analysts continue to advise investors to remain cautious while taking positions and invest in companies with strong fundamentals or high dividend-yielding scrips.

 

Pakistan Stock Exchange benchmark index posts 1.6%WoW increase

Market remained in green throughout the week ended on May 05, 2023 as buyback announcements from LUCK and HBL’s Sponsors boosted investor’s confidence.

The benchmark index gained 661 points during the week to close at 42,242, posting 1.6%WoW increase. Participation also witnessed an increase of 17.5%WoW as average daily trading volume rose to 244.5 million shares as compared to 208.0 million shares a week ago.

On the macro front, IMF reviews still hang in the balance and as the Fund will review the budget plans for upcoming year.

While political instability still persists, as deadlock remains on the election dates between PTI and the incumbent government.

Internationally, crude oil prices dropped during the week due to lower than anticipated demand from China and FED rate hike by 25bps. WTI/Brent declined by 8.0%/8.1%WoW to currently trade at US$70.6/74.7/bbl, respectively.

Foreign exchange reserves of Pakistan remained largely flat on a weekly basis to US$4.46 billion as of April 28, 2023.

PKR remained stable during the week to close at PkR283.59 to a US$, a gain of 0.1%WoW.

Other major news flows during the week included: 1) Trade deficit for first 10 months of FY 23 declined 39.62%YoY to US$23.71 billion, 2) Food pushes inflation was record at 36.4% in April, 3) FBR suffers shortfall of over PKR100 billion in April, 4) POL products sale in April declined 46%YoY to 1.17 tons, 5) April cement dispatches declined 16.55%YoY to 2.95 million tons, 6) Circular debt crossed PKR4 trillion mark.

Synthetic & Rayon, Woollen, and Leasing Companies were amongst the top performers, while Fertilizer, Property, and Refinery were amongst the worst performers.

Flow wise, major selling was recorded by Foreigners with a net sell of US$6.1 million. Individual absorbed most of the selling with a net buy of US$8.0 million.

Top performing scrips during the week were: PGLC, IBFL, PKGS, UPFL, and LUCK, while the laggards included: ENGRO, DAWH, PAKT, JVDC, and JDWS.

Going forwards, any positive development on the IMF front and political stability would further boost the investor’s confidence. However, market upside is expected to remain limited due to record high interest rates in the country and rampant inflation.

Analysts advise investors to take a cautious approach while building positions in the market and continue to advocate the stocks with dollar-denominated revenue streams (Technology and E&P sector), to hedge against the currency risks or companies with healthy forward dividend yields.

Pakistan Stock Exchange benchmark index up 3.14%WoW

Week ended on February 10, 2023 started on a positive note as talks with IMF continued with the delegation that has been in Pakistan since January 31, 2023. Investors remained hopeful regarding outcome of the meetings with the IMF team. Market witnessed bullish sentiments during the first four days of the week with the benchmark index gaining 1,995 points. Come Friday, market nosedived over the inconclusive talks with the IMF team, plunging the market by 725 points on the last trading session of the week. Despite all odds, benchmark index was up 1,271 points to close at 41,742, depicting a 3.14%WoW increase.

Reportedly, Pakistan received MEFP on Thursday at the conclusion of the IMF talks in Islamabad; after the GoP committed to impose additional taxation of PKR170 billion and cut in untargeted subsidies.

Participation in the market witnessed significant improvement with average daily trading volume rising above 284 million shares, from 130.78 million shares in the earlier week, up 117.2%WoW.

Alarmingly foreign exchange reserves by State Bank of Pakistan (SBP) plunged to meager US$2.9 billion, import cover of less than 3 weeks. As a result exchange parity came under pressure to close at PKR268.28/US$ on Friday, recording a fall of 2.6%WoW.

Other major news flows during the week included: 1) Prime Minister approved imposition of additional PKR180 billion taxes, hike in electricity and gas tariffs and on top of all GST rate, 2) delay in opening L/Cs for POL products is likely to lead to petrol crisis in another two weeks, 3) fiscal deficit swelled to 2% of GDP, 4) GoP also hinted at withdrawal of power subsidy for exporters, and 5) GoP sucked in PKR464 billion liquidity from the market via MTBs’ sale.

Textile Weaving, Oil & Gas Exploration Companies and Pharmaceuticals sectors were amongst the top performers. Leasing Companies, Synthetic & Rayon and Property were amongst the worst performers.

Major net selling was recorded by Insurance Companies (US$6.5 million). Individuals absorbed most of the selling with a net buy of US$5.9 million.

Top performing scrips during the week were: OGDC, TGL, MUGHAL, ABOT, and SCBPL, while laggards included: PGLC, EFUG, IBFL, HUBC, and JVDC.

All eyes are on the IMF staff-level agreement, with the positive news from IMF subsequently unlocking foreign inflows.

Improvement in the reserves will be a big relief as restrictions on opening L/Cs are expected to ease off. Even though there may be respite in the short term on the back of IMF’s EFF rollback. Investors are advised to remain cautious as the inflation levels may skyrocket to 30% in the coming months.

Pakistan stock Exchange remains under pressure

Pakistan Stock Exchange (PSX) benchmark index witnessed an overall volatile week ended on January 07, 2023. Depletion of foreign exchange reserves continued, fueling uncertainty. Reserves have fallen by approximately US$2 billion since December 2022 began, pulling import cover down to alarming low level.

Although, some respite was seen towards energy stocks such as PPL, OGDC and refineries with news amidst gas circular debt resolution and fresh investment in a coastal refinery from Saudi Arab (aided by the much anticipated refinery policy).

Overall, average daily trading volume remained low at 176 million shares, as compared to 214.2 million shares traded in the earlier week. The Index gained 588 points during the week, depicting a 1.45% increase.

The PKR also lost some footing against the US$ and depreciated 0.31% to end at PKR227.14/US$ parity on Friday. CPI was still at multi-year highs, at 24.5% for December 2022, lower than expectations as compared to 26.6% in October 2022.

Finally, Trade deficit for November 2022 was reported at US$2.79 billion, down 28.4%YoY. Foreign exchange reserves held by State Bank of Pakistan (SBP) were reported at US$5.6 billion as at December 30, 2022.

On the international front, crude oil remained volatile, averaging at US$82/bbl as the global commodity remained in a limbo on the back of on/off Chinese lockdowns and the emergence of the newer COVID Omricon variant.

Other major news flows during the week were: 1) Pakistan will have to repay by January 10, 2023, US$1.3 billion in foreign loans, 2) annual inflation measured by the Consumer Price Index (CPI) was recorded at 24.5% in December last year, 3) The federal cabinet, on Tuesday, approved the Energy Conservation Plan, barring fresh restrictions on wedding halls and markets, 4) Pakistan is eying generating around US$8 billion from the international community and donor agencies for the rehabilitation and reconstruction of the flood-affected people, 5) Finance Minister Ishaq Dar on Wednesday claimed that friendly countries have announced their support.

Sector-wise, amongst mainboard items, Miscellaneous, Refinery and Transport were the top performers. Vanaspati and allied industries, Leather & Tanneries and Cable & Electrical were amongst the worst performers.

Flow wise, net selling was recorded by Mutual Funds with net sell of US$2.9 million). Companies absorbed most of the selling with a net buy of US$3.2 million.

Company-wise, top performers during the week were: PSEL, SHIFA, ATRL, PPL, and SNGP, while top laggards were: PSMC, HCAR, KEL, GADT, and GATM.

The market is expected to remain under pressure in the near future, driven by the weakness in the PKR against the US$ and the concerns regarding the country’s fiscal health.

Pakistan will have to repay around US$8.3 billion in shape of external debt servicing over next three months of current fiscal year.

Additionally, the political uncertainty and any developments regarding the 9th review by the IMF would remain in the limelight, which would unlock inflows from friendly countries.

Consequently, the market will remain jittery amid uncertainty over economic fronts. Analysts continue to advise a cautious approach while building positions in the market. 

Pakistan Stock Exchange benchmark index up 1.89%WoW

The benchmark index of Pakistan Stock Exchange (PSX) closed at 40,420 points, up 1.89%WoW on the last day of the week ended on December 30, 2022.

The gain can be largely attributable to renewed interest in the oil and gas sector as the Government of Pakistan (GoP) constituted a new committee for the resolution of circular debt.

Participation in the market improved, with daily traded volume averaging 214.27 million shares during the week, as compared to 180.2 million shares in the prior week depicting a gain of 18.9%WoW.

Pakistan is scheduled to make debt repayments of US$ one billion to two commercial banks early in January 2023. Foreign exchange reserves held by State Bank of Pakistan (SBP) further declined by US$294 million to paltry US$5.8 billion as of December 23, 2022.

Other major news flows during the week included: 1) SBP raised EFS and LTFF rates by 2% to 13%, 2) foreign exchange reserves held by SBP plunged to eight-year low, 3) makers raised steel prices by up to Rs25,000, 4) development spending dropped 38% in July-November period, 5) fertilizer offtake declined by 26.4%YoY during Rabi season, 6) power sector receivables crossed PKR2.5 trillion mark, 7) ADB said Pakistan needed US$62 billion to $155 billion for energy sector until 2030, and 8) FBR reduced duty on import of tractors to 15%.

Top performing sectors were: Food & Personal care products, Leasing Companies, and Leather and Tanneries, while the least favorite sectors were included Woolen, Textile Weaving, and Automobile Parts and Accessories.

Top performing scrips were: PSMC, HACR, NESTLE, PPL, and PGLC, while laggards included: THALL, YOUW, NCL, AICL, and ARPL.

Flow wise, Banks were the major buyers with net buy of US$23.93 million, followed by other organizations (US$3.91 million), while foreign investors were major sellers during the week, with a net sell of US$16.59 million.

The market is expected to remain under pressure in the near future, driven by the weakness in the PKR and the concerns regarding the country’s fiscal health. Pakistan will have to repay around US$8.3 billion in shape of external debt servicing over next three months of current fiscal year.

Additionally, the political uncertainty and any developments regarding the 9th review by the IMF would remain in the limelight, which would unlock inflows from friendly countries.

The market is likely to remain jittery amid uncertainties over economic fronts. Therefore, analysts to advise a cautious approach to investors while building positions in the market.

 

 

 

Pakistan Stock Exchange benchmark index closes almost flat

Economic uncertainty regarding Pakistan’s ability to make good on its debt payments kept the market under pressure during the week ended December 09, 2022. The benchmark index closed at 41,698 points, posting a decline of 1.07%WoW.

State Bank of Pakistan (SBP) confirmed the payment of US$1.08 billion of International Sukuk. This brought down foreign exchange reserves held by the SBP to US$6.7 billion on December 02, 2022.

Saudi Arabia provided a much-needed breathing space to Pakistan by announcing the rollover of US$3 billion which would help meet external sector challenges and achieve economic growth.

Participation in the market improved, though negligibly, with average traded volumes increasing to 179.7 million shares from 161.8 million shares in the earlier week.

Other major news flows during the week included: 1)  ECNEC okayed RKR333.6 billion for flood-hit projects, 2) GoP announced to borrow RKR5.52 trillion domestic debt over the next three months, 3) GoP debt rose to RKR50.152 trillion, 4) revised flood damages estimates estimated at US$46 billion, 5) tractor sales anticipated to decline 67 percent, 6) auto financing dropped for the fourth consecutive month, 7) Cement dispatches Declined by 17%YoY in November 20222 and 8) Cotton arrivals plunged 40%.

Top performing sectors were: Miscellaneous, Closed end mutual funds, and Vanaspati and Allied Industries, while the least favorite sectors were: Pharmaceuticals, Jute and Leasing.

Stock-wise, top performers were: PSEL, PGLC, MUREB, ILP, and BAHL, while laggards included: GLAXO, PIOC, CHCC, PSMC, and SEARL.

Individuals were major buyers with net buy of US$8.82 million, followed by Insurance companies with net buy of US$1.26 million. As against this, foreign investors were major sellers, with a net sell of US$6.26 million. Mutual funds continued to be a seller, with a net sell of US$3.71 million.

The market is expected to remain range-bound in the near future, clouded by liquidity concerns of the country, with foreign exchange reserves held by SBP plunging to US$6.7 billion— a less than one month import cover.

Some respite may come in the form of Saudi Arabia’s expected US$4.2 billion (US$3 billion in deposits and US$1.2 billion in deferred oil facilities), alleviating the pressures off the country’s FX reserves to some extent.

Political uncertainty and any developments regarding the 9th review by the IMF would remain in the limelight.

Pakistan Stock Exchange benchmark index falls 1.83%WoW

Pakistan Stock Exchange witnessed an overall volatile week ended on December 02, 2022. The uncertainty regarding the International Sukuk payment of US$1.1 billion lingered amongst market participant, dampening the overall sentiment as well as volumes.

Participation in the market remained overall low, with daily average trading volume traded rising nominally to 161.75 million shares as compared to 159.58 million shares traded in the earlier week.

The benchmark KSE-100 Index lost 786 points during the week, depicting a 1.83%WoW fall. The PKR also lost some footing against the US$, depreciating by 0.11% to end at PKR223.69/US$ on Friday.

CPI was still at multi-year highs, at 23.8% for November 2022, lower than expectations, as compared to 26.6% for October 2022.

Trade deficit for November 2022 was reported at US$2.8 billion, down 42%YoY while foreign exchange reserves held by State Bank of Pakistan (SBP) were reported at US$7.5 billion as of November 25, 2022.

On the international front, crude oil remained volatile, averaging at US$85/bbl as the global commodity remained in a limbo on the back of on/off Chinese lockdowns and discussions at European Union to work towards an agreeable price cap on Russian crude.

Other major news flows during the week were: 1) Sensitive Price Indicator (SPI) rose 0.48%WoW, 2) PTI decided to dissolve Punjab and KP assemblies, 3) Finance Minister Ishaq Dar confirmed the receipt of US$500 million from the Asian Infrastructure Investment Bank, 4) SBP raised PKR 214 billion through the auction of market treasury bills against target of PKR 850 billion, 5) Pakistan’s real effective exchange rate (REER), the value of the rupee against a basket of trading partner currencies, rose to 100.4 in October from 90.7 in the previous month.

Sector-wise, amongst mainboard sectors, Miscellaneous, Leasing Companies and Vanaspati & Allied Industries were amongst the top performers. As against this, Close-end mutual funds, Engineering and Cement were amongst the worst performers.

Flow wise, major net selling was recorded by Mutual Funds (net sell of US$6.3 million). Individuals absorbed most of the selling with a net buy of US$4.19 million.

Company-wise, top performers during the week were: PSEL, PGLC, IBFL, HUBC and SRVI, while top laggards included: PIOC, HGFA, CHCC, MLCF, and MUGHAL.

The market is expected to remain range-bound in the near future, with the risk-free rate standing at 16% currently. Equities continue to be unappealing for investors.

News regarding the International Sukuk payment of US$1.1 billion and the foreign exchange reserves position thereafter will be in focus.

Any developments regarding the 9th review by the IMF would be observed keenly, with a positive outcome possibly restoring sentiment regarding Pakistan’s external position. On the flip side market could become under further pressure by political uncertainty.

Pakistan Stock Market Marred by Foreign Selling

he After recording gains for three successive weeks, the benchmark of Pakistan Stock exchange took a breather with the index closing almost flat at 41,282 points during the week ended 21^st October 2016. The correction was led by the continued rise in political tensions and foreign outflows (US$8.46 million as against an inflow of US$2.2 million during the earlier week).

Average daily trading volume rose by 16.8%WoW to 471.9 million shares, led by retail favorites: BOP, TRG, PACE and JPGL. Scrips leading the market were: EPCL, APL, SNGP, HASCOL and NML. The laggards included: ASTL, CHCC, LUCK, MLCF and DAWH.

News flows for the week included: 1) Current account deficit for September 2016 recorded at US$161 million as compared to US$612 million in July 2016 taking 1QFY17 cumulative deficit to US$1.36 billion, up 136%YoY, 2) all PIB bids were rejected in the latest auction amid weak participation as banks bid at higher yields, 3) expected approval of relief package worth Rs200 billion for exporters, particularly belonging to textile sector, 4) Atlas Honda Limited (AHL) announced expansion with a second production line at its Sheikhupura plant to double assembly capacity to 1.2 million units per annum and 5) MLCF planning to set up a 40MW coal‐fired power plant to fuel its cement manufacturing operations. The company will generate funds worth Rs5.5 billion for the project from its own resources.

Market performance is likely to be dominated by earnings announcement from major sectors next week, including Banks (MCB, NBP, BAFL), Cement (MLCF, PIOC, LUCK, DGKC, FCCL), Fertilizer (FFBL, EFERT, FFC, ENGRO) and Autos (PSMC, INDU). Additionally, the announcement of the anticipated textile package is likely to prop up performance in the sector. However, planned protests by PTI may escalate political noise and keep the market volatile. On the macro front, key events of interest include planned visit by Managing Director of International Monetary Fund and President of Asian Development Bank to the country next week.

IMF recently released its staff level review report on Pakistan at the conclusion of the last review under the 3-year EFF program. Commending GoP on sustained progress on targets, the report highlights significant improvements achieved on the economic front over program's duration. The Fund has shown optimism on the country sustaining recent gains supported by external factors, improving credit outlook and growth initiatives under CPEC. However, this remains underpinned on continued efforts to enhance fiscal management, control debt accumulation and develop business competitiveness. Going forward, analysts expect GoP to revert to populist measures as general elections draw near with further delays in privatization program and fiscal expansion likely outcomes. Moreover, deterioration in external metrics remains a key risk going forward amid a widening current count deficit and debt‐dependent foreign exchange reserve accumulation.

Pakistan Market: Daily trading volume up 35 percent

The benchmark of Pakistan Stock Exchange PSX-100 resumed its pre-Brexit bullish momentum after Eid holidays, touching an all-time high to close at 39,188 level, up 3.7%WoW. As concerns eased slightly, the market was further supported by additional stimulus announced by Japan and stronger data from the U.S. coupled with recovery in crude oil prices, all favorable for the local bourse. Overall activity at the market improved drastically, average daily traded volume for the week increased by 35.5%WoW to 193.8 million shares.

 Key news flows during the week included: 1) Privatization Commission approved offloading of the government remaining 40.25% stake in KAPCO and Expressions of Interest from prospective bidders was invited, 2) three foreign investors including Shanghai Stock Exchange (SSE) have expressed interest in acquiring a stake of up to 40% in the Pakistan Stock Exchange, 3) total deposits of the banking industry crossed Rs10 trillion as of Jun'16 , up 10%YoY as compared to Rs9.14 trillion at the end of last financial year, 4) GoP announced a plan to lay an oil pipeline from Gwadar to China for the export of crude and task given to state construction firm Frontier Works Organization, and 5) GoP raised over Rs236 billion through auction of PIBs with cut-off yields for 3, 5 and 10-year papers declining noticeably.

Performance leaders during the week were: HASCOL, INDU, PIOC and SNGP; while laggards included: EFOODS, ABL, KAPCO and FATIMA. Volume leaders during the week: KEL, SNGP, DCL, EFERT and TRG. Foreign participation improved significantly where net inflow during the week amounted to US$21.4 million as against net outflow of US$1.2 million in last five sessions.

The market is still likely to come under pressure due to the global developments but analysts believe it could sustain current levels over the short term. Support should come from results season commencing next week where major sectors are expected to post strong earnings performance. However, risks for a pullback will linger in the form of: 1) political developments gaining prominence, 2) oil price swings likely to impact the local market, 2) another rate cut in the upcoming monetary policy proving negative for banking scrips. On the global front, upcoming US FOMC meeting and development on UK‐EU negotiations need to be tracked with implications for growing participation.

The IMF recently released its staff level report for the second last review under the IMF EFF stressing the country to continue structural reforms beyond the program's conclusion. Commending Pakistan on its strong performance on the program so far, the report also reiterates largely positive macro outlook though risks remain in the form of weak trade dynamics, policy slippages and political noise. With only one review left, IMF has added two structural benchmarks related to energy sector namely: 1) KAPCO's sell‐off and 2) updating plan for the resolution of circular debt. The twelfth review entailing disbursement of US$100 million is scheduled for end‐Sep'16 where successful achievement of targets would mark the conclusion of the facility ‐ the first for Pakistan. In line with our expectations, GoP will not be entering a new IMF agreement owing to stable external metrics however, GoP is expected to remain engaged in a consultative process with the IMF though without imposition of targets.