Weekly Review: stocks to respond positively to IMF deal

Weekly Review: stocks to respond positively to IMF deal

KARACHI: Pakistan stocks likely respond positively during next week due to expected deal with International Monetary Fund (IMF) as the country has met almost all the requirement.

Analysts at Arif Habib Limited believed clarity should emerge next week on certain economic policies which should aid sentiments at the bourse.

“It seems Pakistan has met all requirements to enter into the IMF program to receive the $1 billion tranche,” they added.

READ MORE: Pakistan stocks crash on super tax imposition

Once the package comes through, other sources of foreign exchange reserves should also open up which should relieve some pressure on dwindling foreign exchange reserves.

Chinese loan of $2.3 billion has already been rolled over and hence, it is expected that the market to be positive in the coming week.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 4.1x (2022) compared to Asia Pacific regional average of 11.8x while offering a dividend yield of around 9.6 per cent versus around 2.7 per cent offered by the region.

The analysts said that the market commenced on a negative note this week over uncertainty over the IMF Program, whereby the index shed 300 points DoD. However, the sentiment turned positive when a Chinese consortium of banks signed a $2.3 billion loan facility agreement, and the Economic Coordination Committee (ECC) approved the second installment of Rs96 billion to the Independent Power Producers (IPPs) of the 2002 power policy.

READ MORE: Pakistan stocks rally on Chinese loan facility

Furthermore, the finance minister announced that an IMF deal is imminent which also helped boost investor sentiment.

However, during the last trading session, the government announced a 10 per cent super tax on 13 major sectors as well as a 4 per cent additional levy on banks, which caused the market to spiral and hit an intra-day low of 40,555 points.

In other news, SBP reserves decreased by $748 million to $8.24 billion which put further pressure on the Pakistan Rupee (PKR), which dipped to an all-time low of 211.93 to the dollar, however the announcement of the China deal helped the PKR recover some lost ground and close at 207.48 for the week.

The market closed at 41,052 points, down by 1,089 points (down by 2.58 per cent) Week on Week (WoW).

Sector-wise negative contributions came from i) Banks (296 points), ii) E&Ps (194 points), iii) Cement (194 points), iv) Fertilizer (120 points) and v) Textile Composite (61 points).

READ MORE: Pakistan stocks shed 68 points on rupee depreciation

Whereas, sectors which contributed positively were i) Tobacco (12 points), ii) Insurance (12 points), and iii) Paper & Board (8 points).

Scrip-wise negative contributors were UBL (97 points), POL (88 points), ENGRO (83 points), LUCK (79 points) and HUBC (75 points). Meanwhile, scrip-wise positive contribution came from EFUG (20 points), KEL (18 points), KAPCO (13 points), PAKT (12 points) and PKGS (8 points).

READ MORE: Pakistan stocks gain 749 points on hopes of IMF program

Foreign selling was witnessed this week, clocking in at $ 2.39 million compared to a net sell of $ 1.91 million last week. Major selling was witnessed in All Other Sector ($ 3.5 million) and Banks ($ 1.9 million). On the local front, buying was reported by Individual ($ 7.0 million) followed by Other Organization ($ 3.4 million). Average volumes clocked in at 301 million shares (up by 73 per cent WoW) while average value traded settled at $ 44 million (up by 72 per cent WoW).

READ MORE: Rupee slips to new low at Rs211.93 against dollar

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