Weekly Review: political, economic uncertainties to haunt stock market

Weekly Review: political, economic uncertainties to haunt stock market

KARACHI: Pakistan equities likely to trade under pressure due to ongoing political and economic uncertainties.

Analysts at Arif Habib Limited said that keeping in view the developments on the political and economic front, the market is expected to remain range bound.

Moreover, they believe, market would also be keenly following developments on external front with any inflows by any bilateral/multi-lateral financial institutions or from any friendly countries likely to trigger positive momentum.

READ MORE: Pakistan stocks gain 122 points in mixed trading

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 3.8x (2023) compared to Asia Pac regional average of 12.7x while offering a dividend yield of 10.2 per cent versus 2.9 per cent offered by the region.

In the outgoing week, market remained bearish, hitting 26-month low of 39,343 points on Wednesday.

The main reason for the decline was uncertainty on political front as PTI announced to dissolve the Punjab assembly, followed by no confidence movement against the Chief Minister of Punjab.

READ MORE: Bears take control of PSX as Pakistan stocks shed 558 points

On the economic front, SBP’s foreign exchange reserves decreased by $ 584 million to $ 6.1 billion, the lowest level since April 2014. Furthermore, Current Account Deficit (CAD) decreased to 19 months low of $ 276 million during November 2022.

Foreign Direct Investment (FDI) went down by 48 per cent YoY | 14 per cent MoM to $ 82 million in November 2022. Moreover, REER clocked in at 98.85 as of November 2022 compared to 100.19 in October 2022.

In addition, Pakistani Rupee (PKR) depreciated by PKR 0.7 | 0.13 per cent WoW against the US Dollar, closing the week at 225.64. The index closed at 39,669 points, losing 1,632 points (down by 3.95 per cent) WoW.

READ MORE: Pakistan stocks end up in narrow range trading

Sector-wise negative contributions came from i) Technology & Communication (379 points), ii) Fertilizer (283 points), iii) Banks (235 points), iv) Cement (161 points) and v) Food and Personal Care Products (101 points).

Whereas, the sectors which contributed positively were i) Miscellaneous (20 points) and ii) Tobacco (5 points). Scrip-wise negative contributors were TRG (231 points), ENGRO (145 points), SYS (124 points), MARI (77 points) and MCB (63 points).

READ MORE: Pakistan stocks gain 174 points amid lackluster trading

Meanwhile, scrip-wise positive contribution came from PPL (28 points), PSEL (26 points), LOTCHEM (24 points), AICL (9 points) and OGDC (8 points).

Foreigners selling continued during this week, clocking in at $ 3.3 million compared to a net sell of $ 9.6 million last week. Major selling was witnessed in Commercial Bank ($ 4.2 million) and E&P’s ($ 0.4 million).

On the local front, buying was reported by Banks/DFIs ($ 7.9 million) followed by Companies ($ 5.0 million). Average volumes clocked in at 180.2 million shares (up by 11.3 per cent WoW) while average value traded settled at $ 21.7 million (up by 7.7 per cent WoW).