Stocks sustain upward journey; crosses 40,000-level again

"The KSE-100 index is up by 14.9% in November 2019, highest one month return after May 2013."

KARACHI (Dunya News) – Pakistan’s stock market’s benchmark KSE 100-share Index on Wednesday further propelled by 234 points and stormed past the 40,000-level. The index rose to 40,023 points during early trading hours.

After Chinese investors expressed keen interest in pouring at least $2 billion into Pakistan’s stock market, PSX Chairman Sulaiman S Mehdi at a press briefing on Friday stated: “Small Chinese stockbrokers having $52 billion in assets under management have shown interest in investing at least $2 billion in shares at the Pakistan Stock Exchange (PSX).”

However, yesterday, the stocks witnessed bearish trend as KSE-100 index closed at 39,788.73 points with a decline of 335.49 points. The PSX receded back to under 40,000 mark after crossing the barrier in around 10 months on Monday.

A total of 286,769,650 shares were traded on Tuesday, whereas the value of shares traded during the day stood at Rs11.75 billion as compared to Monday’s value of Rs13.75 billion.

Total 381 companies performed transactions of shares in the market, out of which 143 recorded gain and 228 sustained losses whereas the share price of 10 companies remained unchanged.

On Sunday, Adviser to the Prime Minister on Finance Dr Abdul Hafeez Shaikh said the recent strong performance of Pakistan’s stock market was proof of “increasing investor confidence on stabilisation measures” employed by the Pakistan Tehreek-e-Insaf (PTI)-led government.

In a tweet, the premier’s aide stated that the 14.9 per cent gain of the KSE-100 Index in November was the highest one-month return over the past six years.

“The KSE-100 index is up by 14.9% in November 2019, highest one month return after May 2013. Since 16 August 2019, the index increased by 36.6% (10,500 points),” said Mr Shaikh.

His comments came after the Pakistan Stock Exchange had a phenomenal rally in the outgoing week despite political uncertainty that jolted investors briefly.

According to updates till Friday, the benchmark KSE-100 index managed to sustain its winning streak for the fifth successive week as it advanced 1,362 points or 3.59 per cent and crossed the 39,000 mark after eight months. It closed the week at 39,288 points.

“In November 2019, the KSE-100 index increased 5,084 points or 14.9pc month-on-month – this is the highest monthly return after May 2013,” said AHL Research in its report.

Earlier, State Bank of Pakistan Governor Reza Baqir had hinted at maintaining the status quo in the monetary policy, which provided much-needed clarity and helped the bourse trade in the green zone.

In the monetary policy announcement, the State Bank of Pakistan (SBP) has kept the interest rate unchanged at 13.25pc.

Foreign investment in government backed treasury bills was recorded at almost USD 800 million since the beginning of FY20, attributable to waning concerns on the economic front has effectively supported the slight growth in FX reserves of the SBP and consequentially, kept the exchange rate parity stable.

The state bank had said market sentiment has begun to gradually improve on the back of sustained improvements in the current account and continued fiscal prudence.

It had said that the current account balance recorded a surplus in October 2019 after a gap of four years, a clear indication of receding pressures on the country’s external accounts together with the end of deficit monetisation has qualitatively improved the inflation outlook.

It had outlined that recent economic data suggest that economic activity is strengthening in export oriented and import competing sectors while inward oriented sectors continue to experience a slowdown in activity.

Specifically, large-scale manufacturing (LSM) shows gains in electronics, engineering goods and fertilizer sectors and decline in auto, food, and construction allied industries of steel and cement.

The external sector continued to show steady improvement, reflecting the benefits of recent policy adjustments and other factors. In the first four months of the current fiscal year, the current account deficit contracted by 73.5 percent to 1.5 billion dollars.

This improvement reflected a notable reduction in imports, a modest growth in exports and steady workers’ remittances.