Daily Times

In the face of mounting political uncertainty and ongoing rupee devaluation, the Pakistan Stock Exchange had a lacklustre trading week. As a consequence of this, the key KSE-100 index finished the week at a level of 40,077, reflecting a loss of 1,998 points.

Sceptical investors hurried to sell their assets as the week got underway, setting the tone for the remainder of the week. Interest from investors was muted as the bourse was plagued by political uncertainty. A new record low in inter-bank trading of Rs228.37 in the rupee against the US dollar has also stifled investors from taking new positions in the currency market. The rupee is expected to have dropped the most since 1998, according to market speculation. But on Wednesday, the bourse took a breather and rebounded modestly, but it failed to maintain the bullish trend and could not address the market’s fears of a quick spike in inflation. The bourse was under selling pressure as the rupee continued to depreciate, bringing the index down below the 40,000-point mark.

Although political unrest and inflationary fears weighed heavily on investors, value buying helped propel the KSE-100 index past the 40,000-point threshold on Friday. The rupee had fallen sharply against the dollar during the previous trading session.

In the end, the index ended the week with a loss of 1,998 points, ending the week at 40,077 points. Share prices fell by 1,998 points to 40,077 as a result of a lack of information about an IMF programme and political uncertainty following Punjab’s by-elections, according to JS Global analyst Muhammad Waqas Ghani. As the Pakistani rupee fell to an all-time low of 228.37 per dollar, negative sentiment was exacerbated (down 23pc CYTD). Market participation was down this week as average volumes fell 8pc from the previous week while traded value was down 31pc, according to the analyst.

With a net purchase of $5m, individuals remained the primary purchasers. Mutual funds, on the other hand, continued to be net sellers, dumping $7.6m in stocks. One of the biggest losers last week was the engineering industry, which fell by 8.2pc, followed by refineries, cement, and OMC. Following Moody’s decision to downgrade Pakistan last month, Fitch has also cut the country’s credit outlook. This week, Finance Minister Miftah Ismail addressed the media in an effort to contain the damage and reassured those in attendance that the government was on pace to close a financing gap of $4b quickly with the support of friendly countries. According to data supplied by the State Bank, the country’s foreign exchange reserves fell by 4pc weekly, the expert added. In its weekly report, Arif Habib Limited stated that political uncertainty had a negative impact on the market.

The Pakistani rupee continued to fall over the week, reaching an all-time low of Rs228.37 due to the depletion of foreign reserves and the uncertainty of funding from friendly countries. Before disbursing the $1.2b loan, the IMF is also determining which friendly countries are willing to assist Pakistan financially. Anxieties mounted on Wall Street as the NASDAQ fell below 40000 points as a result.

Fitch also cut Pakistan’s rating outlook to negative. There was a small increase in price on the last trading day though. It ended the week with a loss of 1,998 points (or 4.75pc) at 40,077 points. Both Sugar and Allied Industries (3 points) and Close-End Mutual Funds made significant contributions to the overall score (2 points). Commercial banks (499 points), fertilizer (294 points), cement (245 points), oil and gas exploration firms (187 points), and power generation and distribution (187 points) were among the industries that had a negative impact on the report (110 points). Stocks like Shakarganj Limited (3 points), HBL Growth Fund (2 points), Highnoon Laboratories (2 points), Murree Brewery Company (1 point), and Dolmen City REIT (1 point) all contributed positively to the overall stock market performance (1 point). Lucky Cement, Engro Corporation, Engro Polymer & Chemicals, and Hub Power Company all contributed negatively to the overall score (90 points). This week, $3.43m was purchased by foreign investors, compared to $1.40m the previous week. More than $1.98m was spent by investors in the technology sector and less than $1m was spent by investors in other sectors.

Locally, Mutual Funds ($7.76m) and Insurance Companies ($2.22m) reported selling. In all, 163m shares were exchanged on an average day, a decrease of 8pc from the previous week (down by 31pc WoW).