KARACHI: Pakistan stocks likely to move in positive territory due to the $2.3 billion loan from China, which helped the State Bank of Pakistan (SBP) reserves to increase to $10 billion.
Analyst at Arif Habib Limited believed that the market participants will factor in another hike in the benchmark policy rate, especially after the Consumer Price Index (CPI) announcement today.
“Short term jitters cannot be ruled out and the sooner an IMF deal is locked in, the better it will be for the equity bourse,” they added.
The Chinese aid of $2.3 billion strengthened Rupee against the greenback settling at PKR 204.85 on June 30, 2022. Moreover, Pakistan received a Memorandum of Economic and Financial Policies from IMF, which signalled that the government is inching closer to an agreement with the Fund.
In addition, the National Assembly approved the amendments made in the Finance Bill for 2022 which brought clarity to the market, especially to the banking sector. Furthermore, the IPPs of the 2002 power policy received the second installment of PKR 96 billion.
The benchmark KSE-100 is currently trading at a PER of 4.2x (2022) compared to Asia Pac regional average of 11.6x while offering a dividend yield of 9.2 per cent versus 2.9 per cent offered by the region.
However, the sentiment was adversely affected by the fiscal measures undertaken by the government (including price hike in MS and HSD by PKR 14.85/litre and PKR 13.23/litre, respectively) to solidify ground for approval of the seventh and eighth review.
Moreover, inflation clocked-in at 21.32 per cent for June 22, 2022 and the current account deficit widening to $1.4 billion in May 22, 2022 which dampened the overall sentiment. The market closed at 41,630 points, gaining 579 points (up by 1.41 percent) Week on Week (WoW).
Sector-wise positive contributions came from i) Cement (92 points), ii) Power (74 points), iii) E&P (69 points), iv) Fertilizer (68 points) and v) Banks (55 points). Whereas, sectors which contributed negatively were i) Refinery (6 points) and ii) Cable & Electrical Goods (4 points).
Scrip-wise positive contributors were HUBC (83 points), POL (64 points), LUCK (47 points), EFERT (39 points) and MARI (36 points). Meanwhile, scrip-wise negative contribution came from HBL (32 points), EPCL (22 points), OGDC (22 points), KAPCO (13 points) and DAWH (11 points).
With the Monetary Policy Committee scheduled to convene on July 07, 2022, the market participants will factor in another hike in the benchmark policy rate, especially after the CPI announcement today.