The upcoming week may be influenced by the outcome of the International Monetary Fund (IMF) loan program, specifically its ninth review. Analysts at Arif Habib Limited anticipate close monitoring of developments regarding the program, as the realization of funds and commitments from other countries and financial institutions could help restore market confidence.
The benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) traded at a price-to-earnings ratio (PER) of 3.8x (2023), significantly lower than the Asia Pacific regional average of 11.1x. Additionally, the PSX offered a dividend yield of approximately 11.9 percent compared to the regional average of 3.0 percent.
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The market started the week positively following the IMF Resident Representative’s dismissal of rumors suggesting that Pakistan would need to raise USD 8 billion instead of USD 6 billion to meet external debt repayments. Furthermore, political tensions eased compared to the previous week, and petrol prices decreased by PKR 12 per liter, while high-speed diesel prices dropped by PKR 30 per liter.
Economic indicators released during the week revealed that Pakistan’s current account posted a surplus of USD 18 million in April 2023, while Large-Scale Manufacturing Industries (LSMI) output declined by 8.1 percent year-on-year during the first nine months of FY23. Additionally, the government raised PKR 444 billion through a Treasury bill auction. However, the State Bank of Pakistan’s foreign exchange reserves fell by USD 72 million week-on-week to USD 4.38 billion. The Pakistani rupee (PKR) depreciated against the USD by PKR 0.74 (-0.26 percent) on a weekly basis, closing the week at 285.8/USD. Overall, the market closed at 41,599 points, reflecting a 112-point (0.3 percent) increase compared to the previous week.
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Positive contributions to the market came from the fertilizer sector (146 points), commercial banks (64 points), miscellaneous sector (40 points), chemicals sector (37 points), and automobile assemblers (21 points). Conversely, negative contributions were made by the cement sector (84 points), pharmaceuticals sector (4 points), investment banks/investment companies (3 points), exploration and production companies (2 points), and engineering sector (2 points). Among individual stocks, positive contributions were made by ENGRO (73 points), UBL (66 points), FFC (60 points), POL (39 points), and PSEL (38 points). On the other hand, negative contributions came from MARI (21 points), PPL (17 points), MEBL (13 points), BAHL (12 points), and SYS (11 points).
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Foreign investors were net buyers this week, with a total of USD 0.6 million invested compared to a net buy of USD 1.1 million the previous week. The majority of buying activity was observed in exploration and production companies (USD 0.7 million) and commercial banks (USD 0.7 million). Locally, selling was reported by insurance companies (USD 4.0 million), followed by mutual funds (USD 1.5 million). The average trading volume reached 130.5 million shares, a 2 percent decrease week-on-week, while the average traded value settled at USD 12.1 million, down by 14 percent compared to the previous week.
