Pakistan Stock Exchange records 45.4%WoW decline in trading volume

The week ended on May 12, 2023 was mired with political uncertainty, at a time Pakistan needs additional financing for the successful completion of long standing 9th IMF review. The benchmark index closed the week at 41,488 points, posting 1.79%WoW decline. Participation also declined to average daily volumes of 133.52 million shares during the week, from 244.47 million shares a week ago, depicting 45.4%WoW fall.

Pakistan has assured the IMF, it will not implement cross fuel subsidy program. Foreign exchange reserves held by State Bank of Pakistan (SBP) eroded by US$74 million to US$4.38 billion as May 05, 2023, with the import cover still remaining below one month.

Other major news flows during the week included: 1) Fiscal deficit for Jul-Mar reaches 3.7% of GDP, 2) GoP raises PKR62.9 billion PIBs auction, 3) Jul-Apr remittances decline 13% to US$22.74 billion, 4) PKR plunges 5.38 against dollar to fresh low and 5) Discos seek PKR1.5 per unit QTA for 3QFY23.

The top performing sectors were: Close- End Mutual fund, Textile composite, and Textile Weaving, while the least favorite sectors were: Vanaspati & Allied Industries, Oil & Gas exploration companies, and Modarabas.

Top performing scrips were: GLAXO, SCBPL, MUREB, PIOC, and ATLH, while laggards included: PSEL, OGDC, PPL, SRVI, and HCAR.

Flow wise, individuals were the major buyers with net buy of US$1.07 million, followed by Broker Propriety trading (net buy of US$0.85 million), while foreign investors were major sellers during the week, with a net sell of US$1.14 million.

Pakistan is in very a precarious situation and further delays can’t be tolerated. World Bank along with AIIB has linked approval of US$700 million loan with the completion of pending IMF review. Political stability will dictate the market performance in the near term.

Ministry has clarified that arrangements have been made for the rollover/ repayment of US$3.7 billion debt which are due by June 30, 2023.

Analysts continue to advocate companies that have dollar-denominated revenue streams, while minimal dollar-denominated cost structures, which hedges them against any currency risk, top of the list includes Technology and E&P sectors.