PSX expected to remain volatile

KARACHI: The volatility at the Pakistan bourse is expected to persist in the coming week, as the investors are awaiting clarity regarding the International Monetary Fund (IMF) ninth review and stability in the domestic political environment, analysts said.

An analyst at Pearl Securities said the benchmark KSE-100 Index ended the week by gaining 751 points to close at 40,420 points. The All-share average traded volume during the week remained at 214 million, compared with the previous level of 180 million, up 19 per cent on a weekly basis.

“Volatility persisted throughout the week on the back of weakening domestic economic fundamentals and the impact of local and international trends such as domestic political uncertainty, impact of China easing Covid-19 restrictions, the lack of material progress in the IMF ninth review and a volatile rupee,” he added.

The foreign exchange reserves of the State Bank of Pakistan (SBP) dropped to $5.85 billion, while the circular debt crossed Rs2.5 trillion-mark, which also dented the investors’ confidence, he remarked.

During 2022, the Pakistan Stock Exchange (PSX) witnessed only three initial public offerings (IPOs) with Rs1.3 billion raised in the year to-date. This is the lowest amount raised in nine years, where the IPOs raised Rs0.8 billion in 2013.

The analysts attributed the dismal performance of the market to the rising macro challenges, political and economic instability and the falling global equity prices.

Of the three listings at the PSX during the ongoing year, Adamjee Life Assurance and Global REIT were on the main board, whereas Supernet was listed on the Growth Enterprise Market (GEM) Board.

The number of IPOs were also the lowest after 2019 when Pakistan saw just one IPO at the bourse.

An analyst at Topline Securities said the KSE-100 Index declined 4 per cent on a monthly basis, owing to a 100 basis points increase in the key policy rate by the central bank, besides delays in the negotiations between Pakistan and the IMF.

“Additionally, the investors expect the SBP to further raise the interest rate by at least 100 basis points in its next meeting scheduled for January 23, amid high inflationary environment and upcoming international debt repayments, amid narrowing foreign exchange reserves grappled the investors’ interest,” he added.

The instability in the country’s political environment remained elevated, as the Pakistan Tehreek-e-Insaf (PTI) called for fresh protests against inflation all across the country.

Earlier, Pakistan was in the middle of another crisis when PTI Chairman Imran Khan called for the dissolution of the assemblies. To counter such measures, the coalition parties moved to submit a vote of no-confidence against the chief minister, speaker and deputy speaker of the Punjab Assembly.

The deadlock continues between the PTI and the federal government over early elections, which has kept the investors’ on the sidelines since the toppling of the PTI government.