KARACHI: The Pakistan Stock Exchange (PSX) is expected to remain under pressure in the coming week, owing to deteriorating macroeconomics, which is hurting the investors’ confidence, analysts said.

The local bourse remained in the negative zone for the most part of the outgoing week, as discouraging news weighed down on the investors’ confidence who opted to remain on the sidelines.

The political environment heated up after the Election Commission of Pakistan (ECP) initiated the process to remove Imran Khan as chairman of the Pakistan Tehreek-e-Insaf (PTI); following his disqualification in the Toshakhana reference.

Delays in the debt restructuring and the International Monetary Fund (IMF) programme further dented the investors’ confidence.

Pakistan’s negotiations with the IMF are at a stalemate with the global lender pushing Islamabad on the policies and reforms needed to keep the bailout programme’s targets on track and complete the pending ninth review.

However, Finance Minister Ishaq Dar said that the government is reaching out to three major IMF shareholders for support in seeking a $7 billion economic bailout package.

An analyst at the Topline Securities said that the benchmark KSE-100 Index declined one per cent on a weekly basis mainly because of the delays in the IMF programme resumption, besides dwindling foreign exchange reserves due to the international debt repayment.

“The investors’ participation continued to remain low, as the average daily traded volume stood at 180 million shares, down 24 per cent on a weekly basis, while the average daily traded value stood at Rs4.1 billion, down 22.5 per cent on a weekly basis,” he added. The macroeconomics of the country continued to deteriorate, posing a significant threat to the investors’ activities in the market.

Pakistan’s trade deficit widened by 23.59 per cent in November to clock-in at $2.87 billion, compared with $2.32 billion in October, as exports declined, the data released by the Pakistan Bureau of Statistics (PBS) showed.

The country’s exports stood at $2.3 billion, compared with the imports of $5.24 billion. On a month-on-month basis, the exports during November 2022 decreased 0.63 per cent, while the imports jumped 11.34 per cent. The foreign exchange reserves of the country also witnessed a significant decline; following the payment of an international Sukuk.

The foreign exchange reserves held by the State Bank of Pakistan (SBP) fell by $784 million to reach $6.71 billion during the week ended December 2, 2022, compared with $7.49 billion on November 25, 2022.

According to the central bank, the foreign exchange reserves declined on account of $1 billion payment for the maturing Pakistan International Sukuk and some other external debt repayments.

“Some of the debt repayments were offset by the inflows, mainly $500 million from the Asian Infrastructure Investment Bank (AIIB),” it said.

The overall liquid foreign currency reserves held by the country, including the net foreign exchange reserves held by the banks other than the SBP, stood at $12.58 billion, while the net foreign exchange reserves held by the commercial banks amounted to $5.86 billion.