KARACHI: Pakistan Stock Exchange (PSX) benchmark KSE-100 Index closed down 1.9 percent or 791 points at 40,869 points mainly led by rout in exploration and production (E&P) stocks owing to sliding international oil prices and delays in finalization of IMF bailout package.
Market activity remained dull during the week ended November 24, 2018 with average daily traded value and volumes declining by 23percent and 26 percent to $56 million and 157 million shares/day.
Foreign selling continued this week clocking-in at $11.6 million compared to a net sell of $24.1 million last week.
Current climate at the domestic equity bourse affirms that the economy remains under siege and investors continue to attach hopes to PM Khan’s international trips and potential inflows from friendly countries. “Moreover, with the government unable to reach agreement on the terms of the IMF, a bailout package from the global financier has been put off till January 2019. That said, with no progress thus far and State Bank of Pakistan’s reported forex reserves falling below that $7.5 billion mark, market trajectory appeared dreary this week,” an analyst at Arif Habib Limited said.
On fiscal front, Pakistan posted fiscal deficit of 1.4 percent of GDP for the quarter ended September 30, 2018 compared with 1.2 percent in corresponding quarter last year. “Jump in fiscal deficit is attributable to relatively slower growth in revenues compared with expenditures. Notable increase was witnessed in debt servicing which was up 14 percent to Rs507 billion due to rising interest rates,” an Elixir Securities said.
Analysts anticipate PSX KSE-100 index to remain in consolidation phase and any move would likely remain contingent on clarity on economic package from China. Two other events to watch out for would be Monetary Policy announcement likely on November 30 (expected 100bps hike) and MSCI Rebalancing on the same date. The recent decline in oil prices however bodes well for Pakistan’s external account and inflation – which can keep sentiments on the positive side.