AVN 64.96 Decreased By ▼ -1.21 (-1.83%)
BAFL 30.25 No Change ▼ 0.00 (0%)
BOP 4.64 Decreased By ▼ -0.09 (-1.9%)
CNERGY 3.88 Decreased By ▼ -0.13 (-3.24%)
DFML 13.55 Decreased By ▼ -0.55 (-3.9%)
DGKC 42.20 Decreased By ▼ -1.49 (-3.41%)
EPCL 45.81 Increased By ▲ 1.16 (2.6%)
FCCL 11.41 Decreased By ▼ -0.42 (-3.55%)
FFL 5.17 Increased By ▲ 0.20 (4.02%)
FLYNG 5.80 Decreased By ▼ -0.30 (-4.92%)
GGL 10.04 Decreased By ▼ -0.34 (-3.28%)
HUBC 63.30 Increased By ▲ 1.00 (1.61%)
HUMNL 5.75 Decreased By ▼ -0.10 (-1.71%)
KAPCO 27.83 Increased By ▲ 0.28 (1.02%)
KEL 2.13 Decreased By ▼ -0.08 (-3.62%)
LOTCHEM 25.33 Decreased By ▼ -1.27 (-4.77%)
MLCF 21.57 Decreased By ▼ -0.95 (-4.22%)
NETSOL 84.99 Decreased By ▼ -1.21 (-1.4%)
OGDC 86.23 Decreased By ▼ -0.04 (-0.05%)
PAEL 10.92 Decreased By ▼ -0.35 (-3.11%)
PIBTL 4.23 Decreased By ▼ -0.05 (-1.17%)
PPL 78.52 Decreased By ▼ -1.56 (-1.95%)
PRL 13.62 Decreased By ▼ -0.04 (-0.29%)
SILK 0.89 Decreased By ▼ -0.01 (-1.11%)
SNGP 40.86 Decreased By ▼ -0.89 (-2.13%)
TELE 6.00 Decreased By ▼ -0.21 (-3.38%)
TPLP 16.00 Decreased By ▼ -0.27 (-1.66%)
TRG 111.70 Decreased By ▼ -0.85 (-0.76%)
UNITY 13.99 Decreased By ▼ -0.36 (-2.51%)
WTL 1.13 Decreased By ▼ -0.07 (-5.83%)
BR100 4,026 Decreased By -48.6 (-1.19%)
BR30 14,402 Decreased By -123 (-0.85%)
KSE100 40,406 Decreased By -441 (-1.08%)
KSE30 15,088 Decreased By -123.1 (-0.81%)
Follow us

At price-to-earning ratio of 6.8x and dividend yield of 8 percent compared to average regional P/E of 14.7x and dividend yield of 2.3 percent, equities listed at Pakistan Stock Exchange are quite an eye candy. But like an eye candy they are only attractive to look at and not interesting otherwise.

Even after the reports of a government bailout fund – a move that has attracted criticism from all independent voices - the benchmark PSX has failed to lift off for over a month. June saw KSE-100 shave off 6 percent while average volumes also remained poor at an average 98 million. Stock prices rose for a few days after the announcement of budget FY20, but post-budget uncertainties clipped those gains pretty soon.

Meanwhile, following exchange rate fluctuations, foreign investors have remained at bay; they were net sellers in June. So were brokers, asset management companies and insurance firms within domestic market. The only local market players who placed relatively bigger buy orders for the month were banks and corporations – but not enough to lift the market up as they were only cherry picking at the bottom.

This week is critical. The IMF’s board is scheduled to meet this week. That news flow, and expectations thereof, will be the single biggest determinant of the direction of trade this week. A rebound rally can also be expected. But sometimes betting on hope can be a dangerous thing. Those who don’t exactly want to bet in the dark, are best advised to wait for the complete IMF document to be released and its scrutiny by independent economists. Who knows what devils sleep between those pages!

Already there are enough uncertainties on the plate, aside from rising inflation and ensuing monetary policy action. Volatility in both directions marks Pakistan’s new exchange rate regime; the market is still to come to grips with that new reality. Complete results of the asset declaration scheme won’t be out anytime soon, whereas FBR’s plans of documentation, sending of notices, analytics-based revenue collection to meet its FY20 targets will also take at least a few months before it starts giving confidence to the market over the government’s fiscal affairs.

Bottom-line: smooth transition to IMF programme, and business confidence over FBR’s plans are critical to driver bears away from the PSX. Over the last fortnight the index has moved back closer to its recent low of 32,354 points, and if it breaks below, then as flagged earlier in this space, the market could be exposed to about 28,000 points. The market action this week might the tone for the rest of the fiscal year. (See also BR Research’s ‘Has KSE-100 found its bottom?’, May 21, 2019 & ‘Stocks rebound: a helium-balloon?’ May 27, 2019).

Copyright Business Recorder, 2019


Comments are closed.

A crucial week for PSX equities

PM Shehbaz hopeful of IMF programme revival ‘this month’

Islamabad court sends Fawad Chaudhry to Adiala jail on 14-day judicial remand

By-elections: ECP announces polling schedule for 33 NA seats vacated by PTI MNAs

PTI challenges Punjab caretaker CM appointment in Supreme Court

India’s Adani slammed by $48bn stock rout, clouding record share sale

Canada names journalist Amira Elghawaby as first anti-Islamophobia advisor

India expects more clashes with Chinese troops in Himalayas

Premature termination of PPA of Hubco power plant recommended

Govt may exempt solar equipment from all taxes

Signing of deal in March: Refineries to get Russian oil by April-end