PSX Investors to Monitor IMF Loan Development Next Week

PSX Investors to Monitor IMF Loan Development Next Week

The investors of the Pakistan Stock Exchange (PSX) will closely monitor developments related to Pakistan’s new loan program with the International Monetary Fund (IMF) starting July 1, 2024.

Analysts at Arif Habib Limited highlight that with the onset of the new fiscal year, the IMF Extended Fund Facility (EFF) program will be a key focus for PSX participants, potentially boosting the market’s momentum.

Additionally, PSX investors will be keeping an eye on the inflation figures for June 2024, which are expected to see a slight increase compared to the previous month. This will be a crucial factor influencing market sentiment. Moreover, current attractive valuations of various scrips are likely to entice investors of the PSX.

The benchmark KSE-100 index of the PSX is currently trading at a price-to-earnings ratio (PER) of 4.5x for 2024, compared to its 5-year average of 6.1x. It also offers a dividend yield of approximately 10.1%, significantly higher than its 5-year average of about 7.3%.

The PSX experienced a range-bound performance during the past week, with selling pressure observed at the KSE-100 index. Despite this, investors remain optimistic about the new IMF program. The State Bank of Pakistan (SBP) played a significant role in the week’s financial activities, raising PKR 131 billion in a Pakistan Investment Bond (PIB) auction and PKR 776 billion in a Treasury Bill (T-Bill) auction, against targets of PKR 190 billion and PKR 450 billion, respectively.

Additionally, the repatriation of profits and dividends in Pakistan increased dramatically by 15.4 times year-on-year, reaching USD 918 million in May 2024, marking the highest-ever monthly repatriation. However, the SBP reserves depicted a decline of USD 239 million (2.61% week-on-week) to USD 8.9 billion. Meanwhile, the Pakistani Rupee appreciated slightly by PKR 0.17 (0.06% week-on-week), arriving at 278.3 against the US Dollar.

The benchmark KSE-100 index of PSX closed at 78,445 points, a decrease of 366 points or 0.46% week-on-week. Sector-wise, negative contributions came from commercial banks (631 points), technology and communication (79 points), automobile assemblers (72 points), textile composite (43 points), and refineries (40 points). On the other hand, sectors that contributed positively included fertilizers (354 points), power generation and distribution (144 points), and food and personal care products (57 points).

In terms of individual scrips, negative contributors included MCB Bank (242 points), United Bank Limited (147 points), Meezan Bank (113 points), Millat Tractors (65 points), and Pakistan Petroleum Limited (53 points). Positive contributions were seen from Fauji Fertilizer Company (248 points), Hub Power Company (148 points), Faysal Bank (67 points), Engro Fertilizers (40 points), and Mari Petroleum (40 points).

Foreign buying was witnessed during the week, clocking in at USD 2.5 million, compared to a net buy of USD 0.6 million the previous week. Major buying was observed in the power sector (USD 2.5 million) and commercial banks (USD 0.8 million). On the local front, mutual funds reported significant selling (USD 5.8 million), followed by other organizations (USD 2.2 million). The average trading volume for the week was 356 million shares, down 23.0% week-on-week, while the average value traded settled at USD 50 million, a decrease of 32.3% week-on-week.