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Encouraging investment scenario brings index gain 2.1% wow
Summary

The consistently improving investment climate in the country through foreign exchange mobilization from friendly countries and new budgetary efforts for ease of doing business have produced results in the month of January in Pakistan Stock Exchange.

During the month of January 2019, it recovered all the lost points in KSE-100 Index in 2018. The KSE-100 Index was 37,066 on December 31, 2018 while it started on in January 1, 2018 with 40,711, a loss of 3,645 points. In January 2019, it started with 37,066 and by end of January 31, the KSE-100 index was at 40,799, a gain of 3733.

In January 2019 the two contributing factors seems to be the entry of foreigners as buyers for continuous three weeks and the mini-budget presented by the government on 23rd January.

The week ended on Friday with total gain of 848 points and KSE -100 Index crossed 41,000 barrier to close at 41,112.71. The average volume increased to 175m and the market capitalization improved to Rs8,170 trillion. The foreigners were net buyer with $12.28m

The market started on thin volume on Monday but it gained 155 points to close at 40,420.09. On restructuring news of PIAC (A), it was volume leader with 15 million shares. Volume decreased to 126m during the day.

On Tuesday stock continued to gain 204 points to close 40,624.39. The news of Economic Coordination Committee approving Rs.200 billion Sukuk for circular debts positively affected the market while news of UBL notification to close down its New York Branch has negative impact on its share.

Wednesday saw a dull session as volume decrease from yesterday 154 m shares to 125m share. The Index closed with a loss of 17.27 points to close at 40,607.12.

It was a good day on Thursday at stock exchange as the stock gained 192.41 to close at 40,799.53. The volume too almost doubled with 239m shares. The investor seems to be encouraged by 19.1 percent return provided by the Index in January.

The monetary policy had its impact on Friday when the Index gained 313.18 points to close 41,112.71. The increase of 25bps in policy rate was considered positive for Banks.

Participants/Activity

On average shares of 353 companies were traded. Of these 196 were gainers and 135 were losers and 22 remained unchanged.

Foreigners were net buyer $12.28m during the week; companies were seller by $4.03m, Banks were seller $3.0m; Mutual fund net seller of $5.34m and individuals net buyers $1.47m.

Volume leaders during the week were: Pak Intl Bulk 45m; Bank of Punjab 33m; PIA C (A) 32m, Dewan Cement 5m; Pak Electron 24m, Fauji Foods Ltd 23m; Dost Steel Mills Ltd17m; World Telecom 16m; Engro Polymer 12m; Perves Ahmed Securities 11m; Unity Foods 11m; TRG Pak Ltd 8m; Siddique Sons Tin 7m; Hum Network 6m; Nimir Resins 5m.

 

Triggers
  • The reserves held by SBP jumped by $1,518 billion to $8.154 billion during the week ended January 25. The recent increase came after inflows of $1bn each from Saudi Arabia and UAE. Net holding of Commercial Banks was $6.64bn while total reserves were $14.8bn.
  • SBP raises policy rate by 25bps to 10.25%.
  • The Asian Infrastructure Investment Bank (AIIB) considering to invest over $1bn in Pakistan’s critical infrastructure projects in transport, urban and rural, water and energy sector.
  • Trade deficit to shrink by $5-6bn by June 2019 claim Adviser on Commerce Abdul Razzaq Dawood.
  • Mini-budget measures not enough to curb fiscal deficit: Moody
  • Pakistan should develop a home-grown economic reforms proram with focus on widening the tax base and increasing investment and competitiveness, said DFID Chief Economist Dr. Rachel Glennerster.
  • PD allowed to raise Rs.200 billion to deal with circular debt.
  • PM launches 3 and 5 years Pakistan Banao Certificates for overseas Pakistanis with a minimum investment of US$500 on an annual rate of return of 6.25 and 6.75 percent.
Conclusion

The positive comments of Moody’s report on mini-budget lifted the sentiments for investors in stock exchange “Barring exports, the country’s external sector has shown marked improvement during the last few months visible in 10 percent increase in remittances and 3 percent slow down in imports.”

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