KARACHI: The Pakistan Stock Exchange (PSX) saw some progress and gained more than 450 points in the previous week as hopes for obtaining a fresh, larger loan package from the International Monetary Fund (IMF) increased and political concerns subsided in the wake of the establishment of a new administration.
Pakistan’s bonds gained value on the global market as a result of the political clarity, and the country’s inflation rate decreased to 23.1% in February from 28.3% in January. These encouraging elements gave the stock market the necessary push. Nevertheless, shaky data showing a 19% YoY drop in cement sales and an 8% drop in oil consumption turned off investors.
A cautious approach was also adopted by investors because of doubts about the pace of economic recovery prior to the mid-March monetary policy statement.
The bourse marched north on Monday at the start of the week as investors took heart from the positive economic data and the election of a new prime leader.
The following day, market participants were concerned about the direction the economy would go as equities were under pressure from economic headwinds and lost more than 200 points. The KSE-100 index continued to see selling pressure on Wednesday as well due to uncertainties around possible IMF negotiations for a fresh $6–8 billion loan package.
The next day saw extremely erratic trading in stocks, which ended slightly lower due to concerns about an economic recovery and the cautious approach taken in front of the announcement of monetary policy. On Friday, investors applauded the IMF’s willingness to discuss a new programme to assist Pakistan handle its economic troubles, and the index marginally increased by over 200 points.
The benchmark KSE-100 index ended the week at 65,793.76, up 468 points, or 0.7%, week over week.
According to Muhammad Waqas Ghani, an analyst at JS Research, the market improved during the week, and average traded volumes increased by 1.6%.
He claimed that during Shehbaz Sharif’s second term as prime minister, the market responded favourably to the political dust settling. He ordered that the IMF be contacted right away in order to get an Extended Fund Facility (EFF).
While the nation was gearing up for a presidential election on March 9 and subsequent Senate elections later in the month, the names of new cabinet members were being finalised.
In addition, Pakistan’s foreign bonds saw a surge on Monday as political clarity followed weeks of unpredictability brought on by a hung parliament.
Due to a large base, the rate of inflation as indicated by the Consumer Price Index (CPI) decreased to 23.1% in February, the lowest level since July 2022.
He said that core inflation showed a similar pattern, with urban core inflation falling to 15.5% (a 13-month low) and rural core inflation falling to 21.9% (a 12-month low), respectively, while the Wholesale Price Index (WPI) YoY pace slowed to 18.7%, a 30-month low. The Karachi Inter-bank Offered Rate, or Kibor, continued to decline as a result of decreased inflation. Since closing on Friday, the six-month Kibor has decreased by 37 basis points.
The JS analyst continued, “Moody’s upgraded Pakistan’s banking sector outlook from negative to stable.”
According to a statement from Arif Habib Limited (AHL), the market maintained its positive momentum throughout the week as investor confidence returned as a result of the new government’s establishment. In terms of the economy, the government sold Market Treasury Bills for Rs527 billion.
Additionally, in February 2024, textile exports jumped 20% YoY to $1.4 billion, while remittances increased 18% YoY to $2.25 billion. Furthermore, the reserves of the State Bank of Pakistan (SBP) decreased by $54 million to $7.9 billion. The value of the Pakistani rupee increased by Rs0.15, or 0.05%, to close at 279.04 versus the US dollar. Wow.
Oil and gas exploration (217 points), refineries (105 points), fertiliser (76 points), power generation and distribution (61 points) and cement (61 points) were the sectors contributing positively to the market.
According to AHL, foreign purchases during the reviewed week totaled $6.3 million, up from $10.4 million in net purchases the previous week.
