Pakistan equities decline 2.7% on concerns over ongoing talks with the IMF

KARACHI: Pakistan Stock Exchange (PSX) fell victim to bearish sentiments for the fifth week in succession as the benchmark KSE-100 index shed another 1,008 points or 2.7% to close at 36,123 levels for the week ended May 3, 2019.[the_ad id=”32940″]Average daily traded volume of 105 million shares/day was down by 14% WoW whereas the average daily traded value shrunk by 13% WoW to US$29 million. Net foreign buying declined from US$9.3 million in the previous week to US$4.8 million with significant portion invested in the cement sector.

“While the outgoing quarter remained positively surprising with sectors such as Commercial Banks, Cements, and Chemicals unveiling above street consensus result outcomes, investors continued to remain wary owing to persisting economic despondency. This has contributed to ambiguity over future corporate earnings growth, and coupled with a lack of clarity over the finalization of the IMF program, the KSE-100 index has continued to remain under pressure,” a report issued by Arif Habib Limited noted.

During Prime Minister Imran Khan’s visit to China, the premier signed six bilateral agreements with the host country, most prominent on the list being the CPFTA-II, the ML-1 and the Havelian Dry Port.

“Continuing the selling spree from the previous week, mutual funds sold a cumulative US$13mn worth of shares. Engineering, Oil & Gas Exploration and Refineries were major sectors to underperform the declining index, while Tobacco and Cable & Electrical Goods remained among the best performing sectors during the week,” Ali Zaidi at JS Global Capital said.

Other major news during the week include arrival of the IMF team for talks on bailout package, Asian Development Bank (ADB) likely to provide a US$1 billion loan for budgetary support, K-Electric signs deal with CMEC for 700MW plant at Port Qasim, Islamic Development Bank (IDB) president’s offer to Pakistan for second phase of Membership Partnership Strategy, ECC’s approval of a substantial increase in petroleum products’ prices and laying of the foundation of Mohmand Dam.

“Volumes usually dry out in the month of Ramzan given shorter trading hours. Albeit, with budgetary proposals following in, we believe certain sectors / scrips may come under limelight. Whereas, staff level agreement of the IMF program is expected to restore confidence of the market. We advise investors to accumulate stocks with a long term view,” an analyst said.

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