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PSX turns bullish on election results, gains 3.79pc wow
Summary

The move towards Pakistan General Election-2018 for National & Provisional Assemblies had a positive impact on Pakistan Stock Exchange (PSX). The KSE-100 Index started moving upward from last week as it gained 951 points as the impression of postponement/delay of election was dispensed off in the minds of investors. Finally this week the vote of around 55% turned around in election showed the respect the voters have given to election exercise. The Stock Exchange, being the barometer of investor sentiments, buoyed by gaining 1,565 points to close well above 42,000 level to 42,786.45 on Friday. The market capitalization too jumped by 214 billion to close at Rs.8,690 trillion. The rupee slide was arrested on Friday as it was trading in open market at 127.50; a day before election the rupee was trading at Rs.130.80

On Monday, the market plunged 758 points on account of pre-election jitters, as some segments of investors like Mutual Funds shed $9.18m.On contrary foreigners and individuals were buyers during the day with $2.43m & 5.34m respectively. The KSE -100 Index closed at 40,463.98 points. The volume declined to 109m from 223m last Friday.

A day before election on Tuesday, there was positivity in the stock market and KSE-100 Index gained 875 points. The individuals continued to be the buyers in the market with $7.65m, which shows the optimism on the back of timely general election. The KSE-100 Index closed at 41,339.22. The volume too jumped to 191m, a gain of 75 percent.

A rally in PSX, which started on the day of election continued its journey a day after the election on Thursday, with victory of Imran Khan of PTI, the Index gained 750 points to cross 42,000 level to close at 42,0.89.16. The volume surged to 254m.

The bullish momentum continued on last day, on Friday. KSE-100 Index gained 697 points to close at 42,786.45 points. The volume increased to 385m. The average volume this week improved to 235m compared to 219m last week.

During the week, the investors’ interest remained focused in cement, banking, oil and exploration and steel sectors. There was gradual improvement in volume in the market and market capitalization. The individual investors remained buyer with $18.95m while the foreigners remained seller with $0.37m as a part of their on-going exit strategy from most of the emerging markets.

Participants/Activity

On average shares of 349 companies were traded. Of these 217 were gainers and 116 were losers and 16 remained unchanged.

Foreigners were net seller $0.37m during the week; companies were buyer by $1.04m, Banks were seller $2.18m; Mutual fund net seller $18.41m and individuals net buyers $18.95m.

Volume leaders during the week were: Pak Int’l Bulk (R) 86m,K-Electric Ltd 49m, PIA (A) 46m; Bank of Punjab 41m, Pak Int’l Bulk 27m; World Telecom 20m; Byco Petroleum 9m; Engro Polymer 8m; Lotte Chemical and D. G. Khan Cement 5m each.

 

Triggers
  • Business community pins high hopes on next government for economic revival, said FPCCI Senior Vice President Syed Mazahir Ali Nasir.
  • Rupee gains against dollar in open market.
  • Profits outflow rises to $2 billion in FY18.
  • Textile import increase 9% YoY to US$ 13.53 billion in FY18.
  • Government has release nearly 32 billion in cash support for promoting exports of textile and clothing in last one and a half year.
Conclusions

The successfully held election 2018 had removed the uncertainty for the investors. The emergence of PTI as the next party to form the government, this further removed the hung parliament confusion for clear political power to make decisions which is so essential for political stability.

Given the current situation of twin deficit and dearth of foreign exchange reserves, it has to be seen how the new government tackle the new situation?

The initial speech of Imran Khan PTI Chairman after victory, is quite encouraging. If the party could translate their words into actions, and tackle the economic woos of the economy; there is no denying of PSX and investors seeing good days ahead.

Raees Uddin Khan,
Research & Development Institute of Securities Management Research & Training (Pvt) Ltd, Karachi.
Dated: July 28, 2018

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