Weekly Review: IMF outcome to set market direction

Weekly Review: IMF outcome to set market direction

KARACHI: Pakistan stocks may depend on the outcome of talks between Pakistan authorities and the International Monetary Fund (IMF).

Analysts at Arif Habib Limited said that a key event to look out for in the upcoming week is the Monetary Policy Committee (MPC) meeting of the State Bank of Pakistan (SBP) on May 23, 2022, whereby an increase of 100 basis points (bps) rate hike is expected.

READ MORE: Pakistan stocks gain 117 points in lackluster session

Whereas after verdict of the Election Commission of Pakistan (ECP), disallowing votes of 25 PTI MPA’s, political clouds will once again hover on the horizon.

“We believe the market will only heave a sigh of relief once clarity emerges on the IMF program,” they said.

READ MORE: Pakistan stocks gain 59 points in range bound trading

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 4.5x (2022) compared to Asia Pacific regional average of 12.3x while offering a dividend yield of 9.2 per cent versus ~2.8 per cent offered by the region.

In the week commencing May 16, 2022, the bourse witnessed a steep fall on the back of investor’s concerns over outcome of the IMF program whereby the fuel and electricity subsidy remains a major hurdle in getting through.

READ MORE: Pakistan stocks fall 819 points on rupee devaluation

Whereas depleting foreign exchange reserves and rupee devaluating to an all time low level of PKR 201/USD together with the ongoing political upheaval also caused investor stampede.

Furthermore, the country posted its highest ever oil import bill during April 2022. However, some positive to range bound sessions were also witnessed mid-week given finalization of estimated GDP growth by National Accounts Committee (NAC) for FY22 at 5.97 per cent (FY21: 5.74 per cent) and a 39 per cent MoM decline in current account deficit to $623 million during April 2022. The market closed in red at 43,101 points, shedding 386 points (down by 0.89 per cent) WoW.

READ MORE: Weekly Review: Pakistan stocks witness 3% decline

Sector-wise negative contributions came from i) Oil & Gas Exploration Companies (148 points), ii) Cement (110 points), iii) Commercial Banks (99 points), iv) Pharmaceuticals (36 points), and v) Technology & Communication (27 points).

Whereas, sectors which contributed positively were i) Chemicals (66 points), ii) Fertilizers (19 points), iii) Engineering (15 points), iv) Paper & Board (13 points), and v) Automobile Assemblers (10 points). Scrip-wise negative contributors were LUCK (59 points), PPL (51 points), OGDC (43 points), MEBL (40 points) and MARI (36 points).

Meanwhile, scrip-wise positive contribution came from EPCL (67 points), FFC (43 points), EFERT (15 points), PKGS (13 points) and NBP (13 points).

Foreign selling was witnessed this week, clocking-in at USD 6.1 million compared to a net sell of USD 1.9 million last week.

Major selling was witnessed in Fertilizer (USD 1.9 million) and Banks (USD 1.3 million). On the local front, buying was reported by Banks (USD 11.5 million) followed by individuals (USD 4.4 million).

Average volumes clocked-in at 221 million shares (down by 19 per cent WoW) while average value traded settled at USD 31 million (down by 26 per cent WoW).

Other major news: i) No raise in POL products’ prices for now: govt, ii) PTI govt procured $52bn loans; $36.05bn was repaid, iii) MSCI’s May SAIR results unveiled, iv) FBR body agrees to resolve ST refunds-related issues v) Hubco seeks exemption from application of IFRS-9 on behalf of all IPPs.

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