Daily Times

The Pakistani stock market witnessed a volatile year during 2019.The benchmark KSE 100 Index gained 3,668 points (9.9%) as compared to 2018. The market gave positive returns after two years since 2016 when it surged by 45.68%.

The stock market registered a dismal performance from January 1st 2019,till August 16, 2019 as it recorded a decline of 22% or down by 8,302 points. However, the market bounced back in style and surprised many by its recovery as it surged by 38% or 11,172 points. Pakistan Stock exchange become the best performing market globally since October first with 14.10% return. According to the world equity index rankings, since July KSE-100 index became the six best performing market and provided over eight per cent return.

The fresh rally was followed by resurgence of the equity market witnessed after August 2019 as the economic indicators rebounded. A relatively stable exchange rate, peaked-out interest rates and shrinking twin deficits were initial signs of improving economic health which boosted investors’ confidence, domestic and foreign. The KSE 100 Index, picked up pace and crossed the 42,000 mark.

The sectors that propped up the index during the year were Commercial Banks gaining 1,867 points, Fertilizer 1,132 point ,Oil &Gas Exploration Companies gaining 941 points, Investment Banks 437 points and Automobile Assembler 127 points.

ENGRO led the major gains during 2019, accumulating 782 points, followed by Habib Bank Limited with 709 points, United Bank Limited 597 points, Dawood Hercules Corporation Ltd 429 points and Oil and Gas Development Company Limited 359 points.

In contrast, the sectors that plucked off the points from the index table includes Cement, Tobacco, Refinery, Pharmaceuticals and Foods as they collectively pared 691 points from the index.

Kot Addu Power Company led the major losses among other companies losing 130 points followed by Fauji Fertilizer Bin Qasim Limited with 116 points, Pakistan Tobacco Company Limited by 110 points, Hascol Petroleum Limited with 109 points.

Meanwhile, Pak rupee depreciated 11.51% against the US dollar in 2019 as on the last day of the year the rupee today traded at Rs 154.84 against the greenback in the interbank market.

During the year, it made a low of Rs 164 on Jun 26, down by 18.14% and high of Rs 138.22 on Feb 6 when compared to the previous year’s close of Rs 138.86.

In May 21, the rupee slipped in by 7.44%, from Rs 141.39 to Rs 151.92, while the second one was observed on June 26 where rupee fell by 4.05% to clock in at Rs 162.16.Another round of depreciation was noted on June 14 as it weakened by 2%.

Pakistan Rupee has been relatively stable since Pakistan entered into IMF program under the Extended Fund Facility. Upon the IMF’s conditionality, the government has switched from managed to the flexible exchange rate which helped to restore competitiveness, rebuild official reserves and provide a buffer against external shocks.

Global markets: Global equities drifted while the dollar ended 2019 on a subdued note following a buoyant year of stock market gains, driven in recent weeks by hopes of an imminent U.S.-China trade deal. In U.S. &P 500 gained 28.5% for 2019, on pace for its biggest one-year gain since 2013, when it rallied 29.6%. The broad index was also within striking distance of its 1997 surge of 31%.Stocks surged in 2019 despite the ongoing U.S.-China trade war as the Federal Reserve cut rates three times while consumer sentiment remained high. Trade tensions also declined in the fourth quarter after China and the U.S. agreed to sign a so-called phase one trade deal.Apple and Microsoft led the way higher for stocks in 2019, rallying 84.4% and 55.2%, respectively. The tech giant shares were the best-performing Dow stocks of the year and accounted for about 15% of the S&P 500?s overall gains for 2019. Market sentiment globally largely improved in December with U.S. and China recently reaching an agreement on a phase one trade deal.

In Asia, most stock markets recorded modest single-digit percentage gains in 2019, compared with double-digit increases for most of their peers across the rest of Asia Pacific. The Nikkei 225 in Japan, the Shanghai Composite index and equity markets in Australia, New Zealand and Taiwan all saw gains of more than 20% from 2018.Even the Hang Sengin Hong Kong managed a 12-month gain of nearly 13%, despite the impact of the protests that have rocked Hong Kong for nearly seven months. Meanwhile, Oil prices are on track for monthly and annual gains, supported by a thaw in the prolonged US-China trade dispute and Middle East unrest.

Brent has gained about 24% in 2019 and WTI has risen 35%. Both benchmarks are set for their biggest yearly gains in three years, backed by a breakthrough in US-China trade talks and output cuts pledged by the Organisation of Petroleum Exporting Countries (OPEC) and its allies including Russia. Signs of progress in the talks between Washington and Beijing and likelihood of signing a trade deal as early as next week boosted factories’ output and Chinese manufacturing activity expanded for a second straight month easing global economic tensions and subsequently boosting chances of growth. Economists expect Prices are likely to remain range bound in 2020 as swelling supplies, particularly from the United States, offset cuts from OPEC amid weakening worldwide demand. The U.S. Energy Information Administration expects average crude oil prices will be lower in 2020 than in 2019 because of rising inventories. Outside the United States, production is expected to continue to grow in Brazil, Norway and Guyana.