The authorities' stance against imposing new taxes ahead of
the upcoming IMF review boosted investor confidence, with expectations of
smooth review process, expected next month.
On the macro front, foreign direct investment (FDI) surged
by 56%YoY to US$1.5 billion in 7MFY25, primarily due to higher inflows from
China into the power sector, especially Hydel projects.
Current account posted a deficit of US$420 million in
January 2025 after three months of surplus, driven by 17%YoY increase in
imports. However, the 7MFY25 balance remained in surplus at US$682 million.
Yields in the latest auction rose by 3 to 17bps, with 3-month
yield on T-bills climbing to 11.82%.
Large-Scale Manufacturing (LSM) index declined by 1.87%YoY
in 1HFY25, primarily due to a slowdown in construction-related sectors.
Market participation also improved, with average daily
traded volume increasing by 14%WoW to 590 million shares, from 519 million shares
a week ago.
Foreign exchange reserves held by State Bank of Pakistan
(SBP) increased by US$35 million to US$11.20 billion as of February 14, 2025.
Other major news flow during the week included: 1) IMF and
Pakistan to discuss US$1bn climate finance talks next week, 2) overseas
investors repatriate US$1.3 billion during first seven months of the current
financial years, 3) IFC announces to invest US$2 billion annually in Pakistan’s
infrastructure, 4) textile exports increased by 11%YoY in seven months, and 5)
GoP decides to deregulate fuel prices and auction offshore blocks.
Glass ceramics, Jute, and textile spinning were amongst the
top performing sectors, while Transport, Pharmaceuticals, and Close-end mutual
funds reported were the laggards.
Major selling was recorded by Mutual Funds and Foreigners
with a net sell of US$8.6 million and US$5.1 million, respectively. Insurance
companies, Individuals, and Companies absorbed most of the selling with an
aggregate buy of US$14 million.
Top performing scrips of the week were: BOP, FCCL, KTML, TGL,
and DGKC, while laggards included: SAZEW, MEHT, SEARL, TRG, and ABOT.
According to AKD Securities market outlook remains positive,
with the KSE-100 expected to be influenced by corporate earnings announcements,
which could set the tone for sector-specific movements.
Any developments regarding the upcoming IMF review or the
US$1.0 billion climate financing by IMF could further trigger positive
momentum. Over the medium term, the KSE-100 is anticipated to sustain its
upward trajectory, primarily driven by strong earnings in fertilizers,
sustained ROEs in banks, and improving cash flows of E&Ps and OMCs,
benefiting from falling interest rates and economic stability.
