Pakistan’s KSE-100 index gains 2.4 percent in the week

KARACHI: Pakistan Stock Exchange (PSX) benchmark KSE-100 index gained 2.4 percent or 958 points to close the week ended January 25, 2019 at 40,264 points as positive news flow from the ‘Economic Reform Package’ announced by Finance Minister Asad Umar lifted market sentiments.

“Market participation increased post announcement of ‘Economic Reform Package’ that focused on boosting investor’s confidence in the market,” an analyst at BIPL securities said. This is evident from an increase in average daily turnover and average daily volume by 43 percent and 22 percent, respectively. Foreign investors were net buyers, exhibiting an inflow of $17 million during the week.

The government abolished super tax for non banking sectors, relaxed tax on inter-corporate dividend and removed 0.02 percent withholding tax (WHT) on stock market transactions.

Furthermore, the decision of lifting ban on the purchase of vehicles up to 1300cc by non-filers was hailed by auto assemblers. Also, the cabinet approved 50 percent waiver in GIDC to settle outstanding dues.

Moreover, World Bank rated the progress of Dasu Dam project as ‘moderately unsatisfactory’ as the country could not resolve the issue of land acquisition which would delay the inauguration of first phase beyond 2021.

Additionally, International Monetary Fund (IMF) lowered the growth forecast for Middle East, North Africa, Afghanistan and Pakistan by 0.3 percent to 2.4 percent for 2019 and recovering to 3.0 percent in 2020.

On the macro front, foreign exchange reserves of the SBP dropped by $265 million to $6.63 billion owing to debt repayment. Also, the country received $1.0 billion each from KSA and UAE to help boost the country’s declining foreign exchange reserves.

Additionally, the Finance Minister Asad Umar revealed that a support package from China is also in progress and would be finalized in the next two weeks to bring the country out of balance of payment crisis.

“We expect the market to continue its positive rally on the heels of improving foreign inflows in the local equity bourse. We expect the foreigners to remain net buyers during next week as well. Moreover, a likely unchanged discount rate announcement in the upcoming monetary policy is also likely to keep the jubilance intact,” a report issued by Arif Habib Limited noted. [the_ad id=”31605″]

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