Karachi, April 5, 2025 – The Pakistan Stock Exchange (PSX) is expected to maintain its positive momentum in the coming week, despite the ongoing global trade tensions and the looming trade war.
The market’s direction next week will be crucial as investors closely monitor how global economies respond to the recent US tariff impositions. On the eve of the weekend, a retaliatory tariff imposed by China on US imports sent ripples through global markets, shaking investor confidence. However, analysts at Arif Habib Limited suggest that the PSX will likely continue its upward trend, buoyed by strong domestic factors.
The start of trading next week is particularly significant, as investors are anticipating the reactions of various economies to the trade dispute. Despite concerns regarding the global economic landscape, the PSX is expected to maintain its positive performance, with analysts pointing to the upcoming result season as a key driver. Certain stocks are anticipated to see heightened attention, driven by expectations of strong financial results.
Currently, the benchmark KSE-100 index of the PSX is trading at a price-to-earnings (PER) ratio of 6.4x for 2025, significantly below its 10-year average of 8.0x, which provides an attractive valuation for potential investors. Additionally, the dividend yield on the PSX is approximately 8.2%, higher than the long-term average of 6.5%, further enhancing the appeal of investing in local stocks.
The two-day trading week following the Eid-ul-Fitr holidays began on a positive note, with the KSE-100 index hitting an intraday high of 120,797 points on Friday. This was largely driven by the announcement from the Prime Minister about substantial reductions in power tariffs, including a PKR 7.4/unit cut for consumers and a PKR 7.59/unit reduction for industries. Although this positive news was tempered by concerns over a 29% tariff on Pakistani exports imposed by the United States, the market was supported by easing inflationary pressures, with the Consumer Price Index (CPI) for March 2025 dropping to its lowest level in nearly six decades.
Sector-wise, banks, cement, fertilizer, tobacco, and real estate investment trusts contributed positively to the PSX’s performance, while sectors like oil and gas exploration (E&Ps), power, and oil marketing companies (OMCs) faced some pressure. Scrip-wise, UBL, MEBL, MCB, HBL, and BAHL emerged as significant positive contributors, while HUBC, OGDC, PPL, and POL weighed on the index.
Foreign investor activity remained strong, with net buying totaling USD 7.38 million, a significant increase from the previous week. This buying was primarily concentrated in the banking sector. On the local front, insurance companies and mutual funds were net sellers, with outflows totaling USD 8.82 million and USD 6.54 million, respectively.
The average volume of shares traded on the PSX stood at 488 million, reflecting a 54% increase from the previous week. Meanwhile, the average value traded rose by 30% to USD 113.6 million, suggesting robust investor activity despite external uncertainties. With a mix of positive domestic developments and continued foreign interest, the PSX is poised to sustain its upward momentum in the coming weeks.