Karachi, September 24, 2023 – Share investors in the Pakistan stock market are expected to closely monitor economic challenges during the upcoming week starting September 25, 2023.
Analysts at Arif Habib Limited have identified several key factors that may influence market dynamics:
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Gas Price Adjustments: The IMF has persistently called for gas price adjustments to address Pakistan’s circular debt issue. Investors will be watching closely to see if the caretaker government implements gas price hikes in the upcoming week.
Market Valuation: The benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) is currently trading at a Price-to-Earnings Ratio (PER) of 3.6x (2024), compared to its 5-year average of 5.7x. This offers a dividend yield of approximately 11.7%, higher than its 5-year average of 6.8%. Market participants will assess these valuations as they make investment decisions.
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Political Stability: The recent announcement by the Election Commission of Pakistan regarding the general elections scheduled for the last week of January 2024 has settled political uncertainty in the market. This development is expected to have a positive impact on investor sentiment.
Treasury Bills Auction: In the latest treasury bills auction, cut-off yields declined significantly by up to 217 basis points for various tenors. This may signal improved confidence in Pakistan’s economic outlook and fiscal management.
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Currency Performance: The Pakistani Rupee (PKR) has exhibited a consistent appreciation trend over the past week, closing against the USD at 291.76. This gain of PKR 5.1 represents a 1.7% weekly increase. A stronger PKR can boost investor confidence and impact market dynamics.
Foreign Exchange Reserves: Foreign exchange reserves of the State Bank of Pakistan (SBP) increased by USD 56 million, reaching USD 7.7 billion. Healthy foreign exchange reserves are essential for maintaining stability in the currency and overall economic health.
Sector Performance: Sector-wise contributions to the market will be closely watched. Positive contributions have been seen in sectors such as Commercial Banks, Power Generation & Distribution, Oil & Gas Exploration Companies, Chemical, and Pharmaceutical. Conversely, sectors like Technology & Communication and Fertilizer have seen negative contributions.
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Foreign Investment: Foreigner buying was witnessed during the previous week, with notable investments in Commercial Banks and Technology and Communication sectors. Monitoring foreign investment trends can provide insights into investor sentiment.
Trading Volumes: Average trading volumes and values will be observed. Any significant changes in trading activity can indicate shifts in market participation and investor behavior.
As investors navigate these economic factors and challenges, their decisions will play a crucial role in shaping the performance of the Pakistan stock market during the upcoming week. Monitoring economic developments and market dynamics remains essential for investors and market participants.
