PSX weekly review: KSE-100 falls over 1,000 points in jittery trading

• A combination of encouraging and discouraging news led to market fluctuation during the week.
• KSE-100 closes at 41,052 points, down by 1,089 points.
• "We believe clarity should emerge next week on certain economic policies," AHL predicts.

KARACHI: The Pakistan Stock Exchange (PSX) endured a tumultuous trading week as a combination of encouraging and discouraging news led to market fluctuation between red and green zones. Consequently, the market closed at 41,052 points, down by 1,089 points (or 2.58%) during the week ended June 24.

The market commenced the rollover on a negative note due to uncertainty regarding the International Monetary Fund (IMF) programme.

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 instalment of Rs96 billion to the independent power producers (IPP) of the 2002 power policy.

Furthermore, Finance Minister Miftah Ismail announced that an IMF deal is imminent which also helped boost investor sentiment. However, during the last trading session, the government announced a 10% super tax on 13 major sectors as well as a 4% additional levy on banks, which caused the market to spiral and hit an intra-day low of 40,555 points.

In other news, the State Bank of Pakistan (SBP) reserves decreased by $748 million to $8.24 billion which put further pressure on the Pakistani rupee, which dipped to an all-time low of 211.93 against the US dollar during the week, however, the announcement of the China deal helped the rupee recover some lost ground.

Other major developments during the week were: Oil and Gas Development Company discovered reserves in Sindh, Punjab, steel bar prices raised to Rs236,000 a ton, non-textile exports soar to $11.2 billion, and the Federal Board of Revenue abolished a 2% additional duty on the import of edible palm.

Meanwhile, foreign selling this week clocked in at $2.39 million against a net sell of $1.91 million recorded last week. Selling was witnessed in all other sectors ($3.5 million), and banks ($1.9 million).

On the domestic front, major buying was reported by individual ($7 million), followed by other organisations ($3.4 million).

During the week under review, average volumes clocked in at 301 million shares (up by 73% week-on-week), while average value traded settled at $44 million (up by 72% week-on-week).

Outlook for next week

A report from AHL believe that "clarity" that will emerge next week on certain economic policies would aid sentiments at the bourse.

“It seems Pakistan has met all requirements to enter into the IMF programme to receive the $1 billion tranche,” it said, adding that once the package comes through, other sources of foreign exchange reserves should also open up which should relieve some pressure on our dwindling foreign exchange reserves.

The brokerage house noted that the Chinese loan worth $2.3 billion has already been rolled over and hence, “we expect the market to be positive in the coming week.”

“The KSE-100 is currently trading at a PER of 4.1x (2022) compared to the Asia-Pacific regional average of 11.8x while offering a dividend yield of 9.6% versus 2.7% offered by the region,” the brokerage house stated.