April gains result best performing month for equity market in past 10 years

April gains result best performing month for equity market in past 10 years

KARACHI: The domestic equity bourse recorded an enormous increase of 4,880 points in April 2020, translating into a return of +16.7 percent MoM and +21.5 percent in USD terms; best performing month since March 2009.

Analysts at Arif Habib Limited said that this took the CY20TD and FY20TD return to -16.3 percent (USD based -19.0 percent) and +0.6 percent (USD +0.5 percent), respectively.

Key development during last month includes surprise cut of 200 basis points from SBP in response to the prevailing COVID-19 pandemic on local economy coupled with approval of Rapid Financing Instrument of USD 1.4 billion by the IMF to meet immediate requirement for external and fiscal space.

The domestic bourse commenced on a bullish note given variety of measures announced by the federal government to curb the economic impact of COVID-19 on the masses.

Moreover, federal govt also announced a much anticipated construction package to support cement and allied industries. Oil prices played a major role during last month as OPEC+ reached a historic agreement of 10mbopd oil cut effective from May 1, 2020.

However, later in the month, for the first time in the history, oil prices traded negative amid availability of no physical storage at Cushing, Oklahoma, US tagged with drastic reduction in oil demand. WTI May’20 contract which was set to expire on Apr 20, 2020 plunged to -37/bbl during the day.

Pertinently, the incumbent government has gradually moved towards a smart lockdown in order to tackle the potential economic fallout of coronavirus.

In this regard, essential services have resumed operations while construction related sectors are also functional with certain SOPs in place across the country.

Current Account Deficit (CAD) for the month of March 2020 dipped to USD 6 million in contrast to USD 823 million in Mar2019.

The decline in CAD was driven by 20 percent YoY decline in total imports along with 9 percent YoY rise in remittances during March 2020.

However, total exports also went down by 12 percent YoY in March 2020. During first nine months of current fiscal year, CAD decreased by 73 percent YoY to USD 2,768 million.

Again, thanks to trade deficit which was down by 31 percent YoY to USD 17.1 billion compared to USD 24.8 billion during same period last year.

Remittances by overseas Pakistanis registered an increase of 9 percent YoY to USD 1,894 million during March 2020 vs. USD 1,734 million during March 2019.

The country wise data reveals that inflow from KSA, UAE, USA and UK amounted to USD 452 million (+11 percent YoY, +7 percent MoM), USD 420 million (+11 percent YoY, +9 percent MoM), USD 352 million (+36 percent YoY, +6 percent MoM) and USD 249 million (-12 percent YoY, -2 percent MoM), respectively.

During 9MFY20, remittances went up by 6 percent YoY to USD 16,992 million compared with USD 16,031 million during 9MFY19.

Foreign direct investment (FDI) during Mar’20 was witnessed at USD 279 million vis-à-vis net inflows of USD 145 million during Mar’19.

During 9MFY20, FDI has witnessed an increase of 137 percent YoY to USD 2,148 million. China remained the largest investor with net FDI of USD 872 million during 9MFY20 compared to USD 22 million during same period last year.

Norway was second largest investor with net FDI of USD 289 million during 9MFY20 compared with net investment of USD 6.4 million during same period last year.

During 9MFY20, major investment poured in the Power sector (USD 757 million) followed by Communications Sector (USD 490 million) and Oil & Gas Sector (USD 218 million).