Karachi, June 17, 2023: Investors in Pakistan’s stock market are closely monitoring the ninth review of the International Monetary Fund (IMF) program as it holds significant importance in managing external crises.
Analysts at Arif Habib Limited highlight that this review will play a crucial role in securing additional financing from other creditors and improving Pakistan’s foreign exchange position.
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Currently, the benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) is trading at a price-to-earnings ratio (PER) of 3.4x (2023), significantly lower than the Asia Pac regional average of 11.5x. Additionally, the market offers a dividend yield of approximately 12.2 percent, while the regional average stands at around 3.0 percent.
The market started the week on a negative note in response to the Federal Budget announcement made the previous Friday. Furthermore, uncertainty surrounding the expected policy announcement by the State Bank of Pakistan (SBP) added to the dampened sentiment. However, the market turned positive the following day when the SBP kept the policy rate unchanged, aligning with market expectations. Nonetheless, the IMF raised objections to the budgetary numbers, emphasizing the need for compliance with conditions such as bridging the financing gap. Moody’s, the credit rating agency, also expressed reservations about Pakistan’s ability to complete the IMF program by June 30th, 2023.
READ MORE: Pakistan Stocks Witness Lackluster Trading Activity, Decline by 145 Points
During the week, the Pakistani Rupee depreciated against the US Dollar by PKR 0.17 (-0.10 percent) WoW, closing at 287.19/USD. On a positive note, the SBP’s foreign exchange reserves increased by USD 107 million, reaching USD 4.01 billion. Overall, the market closed at 41,301 points, down by 603 points (-1.4 percent) WoW.
Negative contributions to the market came from sectors such as fertilizer (208 points), oil & gas exploration companies (163 points), commercial banks (121 points), power (111 points), and technology (60 points). Scrip-wise, the major negative contributors were OGDC (83 points), HUBC (68 points), EFERT (68 points), ENGRO (62 points), and PPL (62 points). On the other hand, sectors that made positive contributions included chemicals (183 points), auto assembler (100 points), and miscellaneous (13 points). Scrip-wise, the notable positive contributors were COLG (236 points), MTL (114 points), SHEL (47 points), PSEL (18 points), and SYS (13 points).
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Foreign selling activity was observed during the week, totaling USD 0.71 million compared to a net buying of USD 3.63 million in the previous week. The major selling was seen in the fertilizer sector (USD 0.18 million) and commercial banks (USD 0.15 million). On the local front, buying was reported by individuals (USD 4.4 million), followed by other organizations (USD 0.6 million). The average trading volumes decreased by 26 percent WoW, reaching 162 million shares, while the average value traded decreased by 31 percent WoW, settling at USD 15 million.
READ MORE: Weekly Review: Pakistan Stocks Anticipate Impact of Budgetary Measures
