KARACHI: Yet another week, yet another case (6th consecutive week) of the market shedding points! This time, the benchmark KSE-100 Index fell 1,406 points (down 3.9% WoW) to close at 34,716 for the week ended May 10, 2019, a level previously seen in May-2016.[the_ad id=”31605″]“Concerns of further interest rate hikes, depreciation of the PKR and fiscal consolidation measures (revision in energy prices, withdrawal of subsidies/tax concessions etc) kept the investment sentiment negative,” a report issued by Arif Habib Limited noted.
Volumes and value traded dipped further by 30% WoW and 22% WoW, respectively. Undoubtedly, the commencement of Ramadan from Tuesday this week also bore down on market activity.
“As has been the scenario over the recent past, this week too, the primary causal factor for a lacklustre market was economic uncertainty, which has recently been ramped up by a notch or two ahead of the IMF program and the Federal Budget FY20. Recent news flows surrounding IMF and the associated conditions have not helped the market’s cause,” Ahmed Lakhani at JS Global Capital said.
Foreign buying continued this week clocking-in at USD 10.4mn compared to a net buy of USD 4.8mn last week. Buying was witnessed in Commercial Banks (USD 10.9mn) and Cement (USD 1.0mn).
Other items of note during the week included Shabbar Zaidi (of PWC fame) appointed FBR chairman, recently disposed finance minister Asad Umar was made member of National Assembly Standing Committee on Finance, Federal Budget to be presented after Eid holidays (June 11, 2019), budgetary borrowings jump by 26% YoY in 10MFY19, and foreign exchange reserves held by the State Bank of Pakistan (SBP) increase by US$179mn WoW to US$8.98bn.
With the IMF program expected to be announced soon, investor sentiment can be expected to rebound. Clarity over the economic direction from the IMF program is likely to resuscitate confidence of investors. We advise investors to accumulate positions in blue chip stocks with a long term view.