PSX Index Posts 0.67%WoW Decline

The benchmark index of Pakistan Stock Exchange showed varying trends throughout the week, ultimately closing with a modest 0.67%WoW loss at 78,045 points. However, market participation showed signs of recovery, with the average daily traded volume rising to 367.68 million share as against 345.10 million shares a week ago, up 6.5%WoW.

Meanwhile, the government reports progress in negotiations with China regarding the restructuring of power base loans, which is expected to support a reduction in tariffs.

The MSCI, in its August 2024 review transferred SAZEW to its Frontier Market Index, while adding six new stocks to MSCI’s Small Cap index.

July 2024 remittances remained robust, totaling US$3.0 billion, with Saudi Arabia being the highest contributor.

Foreign exchange reserves held by the central bank rose by US$119 million on a weekly basis to US$9.27 billion as of August 09, 2024.

In July 2024 Auto industry sales were up 30%YoY to 10,356 units, additionally Passenger cars & LCV’s sales were reported at 8,589 units, up 69%YoY.

The MS and HSD fuel prices have decreased during the week. Concurrently, Petroleum products imports witnessed a decrease of 27%MoM, reported at US$499 million for July 2024.

On the currency front, PKR largely remained stable against the greenback throughout the week to close at 278.54/US$ on Friday.

Other major news flow during the week included: 1) Refining sector sets massive furnace oil export target, 2) External debt to GDP ratio hits 6-year low, 3) Internet firewall could cost economy US$300 million, 4) No Cabinet approval to urea import proposal and 5) Five mineral projects picked for investment.

According to AKD Securities Property, Textile Weaving, Jute, Textile spinning & Exchange Traded Funds were amongst the best performers, while Vanaspati & Allied Industries, Automobile Assemblers, Woollen, Leasing Companies & Refinery were amongst the laggards.

Major selling was recorded by Companies with a net sell of US$4.37 million. Individuals absorbed most of the selling with a net buy of US$7.18 million.

Top performing scrips of the week were: YOUW, JVDC, NPL, GHGL and MARI, while laggards included: KAPCO, NBP, PGLC, NRL and THALL.

Going forward, the market is expected to continue positive momentum as global market concerns settle and macroeconomic indicators remain favorable.

The anticipated IMF Executive Board approval during the month is likely to support the momentum.

Sectors benefiting from monetary easing and structural reforms would remain in the limelight. However, modest economic recovery would keep the upside in check for the cyclicals.

 

 

Pakistan Stock Exchange benchmark index declines 2.61%WoW

Pakistan Stock Exchange experienced volatility throughout the week ended on July 29, 2024, heavily influenced by political noise. The benchmark index lost 2,088 points 0r 2.61%WoW at close at 78,029 points.

With Pakistan's agenda yet to be included in the IMF board meeting, authorities are focusing on fulfilling other external financing requirements, with efforts including visit to China for possible debt rescheduling, especially of power producers.

The Finance Minister engaged with global rating agencies, Fitch and Moody's, aiming for a possible improvement in the country's credit rating to facilitate capital raising through external sources.

In the last T-Bills auction, yields dropped by 30-56 bps, indicating market expectations of a 50-100bps cut in the upcoming Monetary Policy Committee (MPC) meeting on Monday. However, experts anticipate the MPC to maintain the status quo due to the re-emergence of strong inflationary pressures from food supply disruptions and recently announced revenue measures in the FY25 budget.

The July 2024 inflation is expected to clock in at 10.96%YoY as compared to 12.57%YoY in the preceding month. On the external front, foreign exchange reserves held by the central bank declined by US$397 million to US$9.03 billion as at July 19, 2024.

With the said volatility in market, participation decreased by 27.3%WoW, with the average daily traded volume falling to 337 million shares, from 464 million shares a week ago.

On the currency front, PKR largely remained flat against the greenback throughout the week, closing the week at 278.3/US$.

Other major news flows during the week included:1) Forex reserves declined by US$369 millio, 2) Income estimates slashed to PKR9.1 trillion, 3) Auto financing registered downward trend for second straight year and 4) GoP announced to pull out of fuel pricing process, giving OMCs free hand.

Leasing, Vanaspati & allied industries and Textile spinning were amongst the top performers, while ETF’s, Inv. Banks/ cos., and Jute were amongst the worst performers.

Major net selling was recorded by mutual funds with a net sell of US$5.0 million. Foreigners and insurance co. absorbed most of the selling with a net buy of US$4.6 million and US$4.4 million, respectively.

Top performing scrips of the week were: PAKT, GADT, JVDC, FFBL and LCI, while laggards included: NCPL, NPL, KAPCO, INIL and FCEPL.

Going forward, market’s focus will primarily be on the MPC meeting scheduled for Monday, with any rate cut to boost investor’s confidence and draw increased attention to the cyclical sector.

Additionally, the anticipated approval from the IMF executive board next month is likely to support bullish momentum.

Sectors benefiting from monetary easing and structural reforms would remain in the limelight.

Pakistan Stock Exchange benchmark index touches new highs

Market's bullish momentum continued during the week ended on April 05, 2024, with the benchmark index challenging previous highs and achieving the highest-ever closing at 68,417 points on Thursday, with a gain of 1,412 points or 2.1%WoW.

The momentum was supported by easing inflation, turning real interest rates positive for the first time in 38 months.

Foreign investors and institutions injected additional liquidity through buying, supporting the market's momentum.

Despite a 9.2%MoM growth in exports, trade deficit widened to US$2.2 billion, up 25%MoM.

With Eid approaching, remittances are expected to increase, helping to control the current account balance.

FBR missed its monthly tax collection target for the third consecutive month, although the 9MFY24 numbers were still within target.

World Bank estimated the country's GDP growth target at 1.8% for the current year, below 3% for the following two years, resulting in an overall combined GDP growth for three years that remains lower than the population growth rate.

With a stable exchange rate and high yields, hot money has begun to return, with net inflows into T-bills from January to March 22, 2024, reaching US$126 million.

Reportedly Saudi Arabia has expressed interest in purchasing shares of two E&P giants ‑ OGDC and PPL, in addition to an expected investment of US$1.0 billion in the Reko Diq project.

According to the reports, Lahore High Court dismissed the application against the deregulation of non-essential medicines, which boosted positivity in the sector on the last trading day of the week.

Lastly, increasing tensions in the Middle East have led to international oil prices reaching their highest levels in six months, posing risks to Pakistan’s import bill as well as the inflation outlook if not eased promptly.

Despite bullish sentiments, market participation declined with daily traded volume averaging at 307 million shares as compared to 331 million shares a week ago, down 7.1%WoW.

Other major news flows during the week included: 1) experts estimated Pakistan needs US$120 billion needs in external financing over five years, 2) Petrol price increased by PKR9.66 per litre, and 3) Cement dispatches were up 3.85%MoM in March.

Pharmaceuticals and Refineries were amongst the top performers, while Transport, Tobacco, and Synthetic & Rayon were amongst the worst performers.

Major net selling was recorded by Insurance cos. with a net sell of US$5.6 million. Foreigners absorbed most of the selling with a net buy of US$3.9 million.

Top performing scrips of the week were: DAWH, SCBPL, MUREB, BIPL and SEARL, while top laggards included: PTC, KTML, PAKT, IBFL and PKGS.

Going forward, market is expected to return its focus to negotiations with the IMF regarding the EFF program, upcoming monetary policy committee meeting, and the corporate results season following the Eid holidays.

Despite the market reaching its highest levels, the forward P/E remains below 4.0x, which instills positivity regarding the market's fundamentals. Analysts continue to advise investors to consider fundamentally strong stocks.