KARACHI: The depreciating rupee, rising deficits and anticipation of sharp jump in interest rates dragged the Pakistan stocks down 2 per cent during the week ended December 3, 2021, dealers said.

However, with the ease in the global commodities improving Pakistan’s macro-outlook, the International Monetary Fund (IMF)-related uncertainty largely behind and the MSCI-related rebalancing, the market is poised to have a strong year-end performance.

“[The] global commodity prices are in a downward spiral as the Covid’s new variant threatens global economic growth outlook with TRJ Commodity Index down 4.5 per cent in the last 15 days, providing the much-needed confidence in Pakistan’s macro-outlook,” Hamza Kamal at AKD Securities said.

Moreover, these developments could prove catalytic for the index gaining upward momentum with the year-end phenomena carrying the index forward.

“November inflation at 11.53 per cent with [the] signs of higher inflationary readings in [the] coming months would keep investors on toes regarding the pace of monetary adjustments in our view.”

“We continue to advocate for thematic investments where we like [the] banks on monetary tightening, cements on declining coal prices improving earnings outlook, and energy on [the] circular debt payments.”

The Pakistan Stock Exchange KSE-100 shares Index shed 2 per cent or 881.33 points, to close at 43,234.15 points. The KSE-30 shares index lost 1.85 per cent, or 315.78 points, to close at 16,697.96 points.

Recovery in participation came in with average daily trading volumes increasing by 20.8 per cent to 319 million shares. Average value of traded securities for the outgoing week declined went up 73.6 per cent to $15.85 million.

Ahsan Mehanti at Arif Habib Corporation said that the stocks closed under pressure during the week on the rupee instability and surging government bond yields.

“Foreign outflows, hike in the industrial power tariff, uncertainty over resumption of [the] IMF programme played a catalytic role in [the] bearish run at the market.”

An analyst at KASB Securities said trade imbalances were hovering at record levels during the last few months because of rising economic activity, amid the commodity up-cycle.

“[The] latest trade figures highlight that Pakistan’s imports surged to an all-time high of $7.75 billion in November.”

“Based on [the] SBP’s forward guidance and the macro-imbalances depicted in recent economic data points, we believe the SBP could potentially hike the policy rate by another 125bps and push [the] interest rates to double-digit.”

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