KARACHI: The Pakistan Stock Exchange (PSX) benchmark (KSE-100) index experienced a significant surge this week, closing at 82,074 points, an increase of 2,741 points or 3.5% week-on-week.
This bullish trend of PSX was driven by optimism surrounding the anticipated approval of a $7 billion loan from the International Monetary Fund (IMF), with the IMF Executive Board scheduled to meet on September 25, according to AHL research.
Additionally, a 50 basis points rate cut by the Federal Reserve boosted market participation across Asian markets, including Pakistan. Large Scale Manufacturing Industries (LSMI) output saw a year-on-year increase of 2.4% in July 2024, although it decreased by 2.1% on a month-on-month basis.
Pakistan posted a current account surplus of $75 million in August 2024, the first surplus in four months. All bids in the T-Bill auction were rejected, and significant rate reductions were observed in the Pakistan Investment Bonds (PIB) auction, ranging from 190 to 335 basis points across all tenors.
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The State Bank of Pakistan’s reserves increased by $43 million, reaching $9.5 billion, and the Pakistani Rupee appreciated by 0.12% against the US Dollar, closing at 277.8. Sector-wise, positive contributions came from commercial banks, exploration and production (E&P), fertilizer, cement, and oil and gas marketing companies (OGMCs), while negative contributions were noted in refinery, engineering, and glass and ceramics, according to AHL.
Foreign investors continued to sell at PSX, with net selling amounting to $23 million, compared to $7.5 million last week. Major foreign selling was seen in Fertilizer, exploration and production (E&P), and Banks. On the local front, mutual funds led the buying, followed by Individuals and banks. Average trading volumes were 469 million shares, down 22.6% week-on-week, while the average value traded increased by 20.9% to $66 million.
Other major news of the week included the end of the rice export boom, a sharp fall in power generation, challenges in deregulating Pakistan’s oil sector, a request for additional funds to cover the rupee deficit, and a dramatic 64% drop in cotton arrivals. The market outlook remains positive, with expectations of continued upward momentum driven by the IMF loan approval and robust results from certain scrips.
The PSX’s KSE-100 is trading at a price-to-earnings ratio of 4.1 times for 2025, compared to its 5-year average of 5.9 times, offering a dividend yield of approximately 10.5%, compared to its 5-year average of around 8.2%, according to AHL.
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