Last week, the Pakistan Stock Exchange (PSX) held up well. At first, investors sold off their shares, which put pressure on the market, but it quickly recovered when good economic news came out.
A Look at the Market’s Performance:
The week started badly when the KSE-100 index dropped by more than 280 points on Monday. This was because of problems in the global stock market and the country’s government. But things took a big turn for the better on Tuesday when the index rose by more than 650 points. This was helped by payments going up sharply by 40% year-over-year, reaching $2.9 billion in August 2024.
Wednesday brought more market instability; the drop of 634 points was caused by ongoing political uncertainty. The index went up by more than 350 points on Thursday because people thought the State Bank of Pakistan (SBP) would cut interest rates even more.
Investors were still excited about Friday’s trading session after the SBP announced a rate cut and the IMF Executive Board meeting date was confirmed. Because people were feeling good, the KSE-100 index went up by more than 300 points. It ended the week at 79,333 points, up 435 points, or 0.55%.
Key factors and performance by sector:
Wadee Zaman, an expert at JS Global, said that the KSE-100 briefly went over 80,000 points, but it couldn’t stay there because of selling pressure at the end of the week. The index went up by 0.6% from one week to the next. Even with these gains, foreign buyers continued to sell, with a net outflow of $8.2 million in the Foreign Portfolio Investment (FPI) for the week.
The announcement of the IMF Executive Board’s meeting in September 2024 to accept a $7 billion Extended Fund Facility (EFF) was a good sign for the economy. The Federal Board of Revenue (FBR) also hinted at a possible Rs650 billion mini-budget, which could raise withholding taxes on properties, GST on tractors, and penalties for people who don’t pay their taxes.
After 26 months, the SBP’s foreign funds hit a 26-month high of $9.5 billion on September 5, 2024. In August 2024, transfers came close to $3 billion, staying at a high level for the fourth month in a row. In August, sales of four-wheelers were up 13% year-over-year, but the results were mixed.
Arif Habib Limited (AHL) said that even though sell-offs put pressure on the market at first, it was helped by several good economic factors, such as the SBP’s loosening of monetary policy, progress with the IMF, and rising SBP funds. The Pakistani rupee gained 0.15% against the US dollar and ended the day at Rs278.2.
Fertilisers (161 points), cement (159 points), exploration and production (92 points), leather (74 points), and medicines (54 points) all made the economy stronger. The business banking sector (-119 points), automobiles (-115 points), and power generation (-80 points) were some of the sectors that did poorly.
This week, foreign investors sold shares worth $7.5 million, which is more than the $6.7 million they sold last week. This shows that international investors are still being careful, even though the market is recovering.
Overall, the PSX’s rise last week shows that the market can return even when the economy is having trouble, thanks to helpful policies and good economic signs.