Karachi, June 15, 2024 –Pakistan stocks will observe only two trading sessions next week, starting June 17, 2024, due to public holidays announced for Eid-ul-Adha.
The government has declared holidays from June 17 to June 19, significantly reducing the trading days for the week.
Analysts at Arif Habib Limited noted that with Eid-ul-Adha falling in the upcoming week, Pakistan stocks activity is expected to be subdued. Despite the shortened trading period, investors of Pakistan stocks will remain vigilant, particularly regarding developments related to the new International Monetary Fund (IMF) program, which could influence market sentiments.
The benchmark KSE-100 Index of the PSX is currently trading at a price-to-earnings ratio (PER) of 4.4x for 2025, compared to its 5-year average of 6.1x. This presents a dividend yield of approximately 10.3%, significantly higher than its 5-year average of about 7.3%.
Earlier this week, a 150 basis points cut in the policy rate was announced, which initially caused jitters in the market due to concerns over a potential increase in taxes on capital gains and dividends. However, the Federal Budget for 2025 later revealed a lower-than-expected hike in the capital gains tax while maintaining the current dividend tax rates.
This news spurred bullish activity at Pakistan stocks, leading to a record day-on-day increase of 3,411 points in the KSE-100 index on Thursday. The index subsequently hit an all-time high of 77,310 points on Friday.
Moreover, the State Bank of Pakistan (SBP) raised PKR 1,208 billion in a Treasury Bill auction against a target of PKR 780 billion. The yields for 3-month, 6-month, and 12-month T-bills declined by 85 basis points, 103 basis points, and 115 basis points, respectively. Despite these positive developments, SBP reserves saw a slight decline of USD 6.2 million (0.07%) to USD 9.1 billion. The KSE-100 index of Pakistan stocks closed the week at 76,707 points, gaining 2,953 points (4.00% week-on-week).
Sector-wise, the positive contributors to the index included commercial banks (1,449 points), fertilizer (406 points), exploration and production (362 points), cement (244 points), and power generation & distribution (150 points). On the downside, textile composite (-95 points), chemicals (-56 points), and technology & communication (-9 points) sectors contributed negatively.
Key scrip-wise contributors included UBL (357 points), MCB (328 points), BAHL (185 points), MEBL (176 points), and BAFL (170 points). Conversely, ILP (-99 points), COLG (-63 points), PTC (-19 points), KEL (-17 points), and NBP (-11 points) contributed negatively.
Foreign investors registered net selling of USD 5.8 million, compared to a net buy of USD 4.4 million the previous week. Major foreign selling occurred in the exploration & production sector (USD 2.7 million) and other sectors (USD 1.8 million). Locally, mutual funds and companies were net buyers, with USD 11.1 million and USD 7.9 million, respectively. Average trading volumes for the week stood at 410 million shares, a 3.3% decline from the previous week, while the average traded value was USD 61 million, down 1.7% week-on-week.
Despite the upcoming holidays and a shortened trading week, investors will be keenly observing Pakistan stocks movements and economic indicators, particularly in relation to the IMF program and fiscal policies.