Pakistan bourse expected to remain under pressure

KARACHI: The Pakistan stocks remained dull during the outgoing week, while the market is likely to move both ways in the absence of any positive trigger.

“Proactive measures undertaken by the incumbent government and the State Bank of Pakistan (SBP) to avoid another boom and bust cycle and ensure economic growth remains sustainable in the upcoming years, should keep the demand cushioned,” a report issued by Arif Habib Limited noted.

Ahsan Mehanti at Arif Habib Corporation highlighted investors’ concerns over the dismal economic outlook. “Political noise, reports of surging external debt and the rupee instability will keep the market under pressure.”

The KSE-100 Index is expected to generate a total return of 25 per cent during 2022. We expect the local bourse to reach 55,000 points by December 2022.”

The Pakistan Stock Exchange (PSX) KSE-100 shares Index gained 0.49 per cent, or 217.71 points to close at 44,118.39 points. The KSE-30 shares index gained 0.31 per cent, or 55.33 points, to close at 17,353.47 points.

All shares average traded volume during the week remained low to stand at 215 million, down 19 per cent, compared with 265 million traded last week.

An analyst at Topline Securities said during the outgoing week, the SBP governor in an interview said they were ready to pause the interest rate increases to preserve economic recovery after making Asia’s most aggressive rate hikes (275 basis points in total) in three goes since September 2021.

An analyst at Arif Habib Limited said the pressure on the external account, rising inflationary reading, recurring waves of Covid-19, delay in the approval of the International Monetary Fund (IMF’s) sixth review, and transition from the MSCI Emerging Markets to the Frontier Markets put pressure on the bourse.

An analyst at Perl Securities said the sentiment remained depressed on the news that the government decided to pass the mini-budget through executive order in the coming days.

“Concerns over Pak-Afghan conference, international oil prices falling near $70/bbl and [the] declining foreign exchange reserves kept the activity on the lower side.”

Moreover, the Ministry of Finance issued a statement that the sixth review of the Extended Fund Facility (EFF) would be presented to the International Monetary Fund (IMF) board on January 12, while the government has decided to submit two bills before the parliament next week for abolishing the general sales tax (GST) exemptions, raising withholding tax on the telecom sector and granting autonomy to the central bank, as part of the prior actions of the IMF programme.