Friday, July 1, 2022

Weekly review: KSE-100 sheds 184 pts, likely to remain in green on IMF, Amnesty announcements


Zain Zubair
Zain Zubair is a staff writer for World News Observer. He is studying ACCA in Pakistan. Besides Accountancy and writing pieces, he loves cooking and nature photography. Zain has attended various modern journalism workshops. Contact: [email protected]

Pakistan Stock Exchange (PSX) winds blew in all directions, with the benchmark KSE-100 index closing in green on 3/5 days and ending the week at 37,338pts (down by 184pts, 0.5% WoW).

While low GDP forecast by the IMF and cement price cut mid-week in North and South ruined market sentiment initially, growth in remittances, positive outcome of the Finance Minister’s meeting with World Bank and IMF in the US, anticipation of another Amnesty Scheme together with talks of cement price restoration by cement manufacturers, revived the colour of the market.

Analysts highlight that the market fell below its 3-year low this week.

Negative sector-wise contributions came from Cement (209.9pts) as news of cement players cutting prices eroded investor confidence, Oil & Gas Exploration Companies (63.7pts), Fertilizer (39.1pts), Textile Composite (19.3pts), and Pharmaceuticals (18.6pts).

On the flip side, sectors that contributed positively include Power Generation & Distribution (73.4pts), Commercial Banks (72.2pts), Oil & Gas Marketing Companies (20.pts), Food & Personal Care Products (11.8pts), and Automobile Assembler (11.7pts).

Scrip-wise major negative contributions came from LUCK (60.7pts), FCCL (36.1pts), and DGKC (35.7pts)

Foreign selling continued this week clocking-in at USD 2.2mn compared to a net sell of USD 3.7mn last week.

Selling was witnessed in Commercial Banks (USD 4.0mn) and Power Generation & Distribution (USD 0.7mn).

On the domestic front, major buying was reported by Banks / DFIs (USD 4.0mn) and Companies (USD 3.6mn).

Volumes settled at 148mn shares (up by 25% WoW) while value traded clocked in at USD 34mn (up by 36% WoW).

Other major news: “No reason” for further big Pakistan devaluations – minister, Amnesty scheme from April 15, Without reforms, Pakistan’s growth rate to remain at 2.5pc till 2024: IMF, Exports, imports decline in March, Remittances soar to USD 16.1bn, and Foreign exchange: SBP reserves fall USD 220mn to stand at USD 10.3bn.

Market Outlook

Analysts expect the market to turn positive in upcoming days with triggers including Amnesty announcement and agreement with the IMF (principal agreement has been reached but staff level arrangement remains pending).

Moreover, budget proposal will continue to flow in and keep certain sectors under limelight.

The KSE-100 index is currently trading at a PER of 7.5x (2019) compared to Asia Pac regional average of 14.3x and while offering DY of ~7.7% versus ~2.5% offered by the region.

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