Pakistan Stock Exchange (PSX) started of 2021 on a bullish run as it emerged as the 2nd best performing market in the region and 7th best performing market in the world in the month of January.
“Historically we have seen healthy returns during the month of January and this month was no different. Infact KSE-100 returns (6.0%) have outperformed last 10-Yr average returns (4.1%) of January. The USD-based return for the month settled at 5.8%. 7MFY21 returns of the index have settled at 34.8% (USDbased: 41.4%),” stated Arif Habib Limited in its latest report.
The report was of the view that the State Bank of Pakistan (SBP) latest introduction of forward guidance on its monetary policy, provided much-needed clarity to investors and to the business community and helped to evaporate any uncertainty over the interest rate outlook, which helped uplift sentiment in the local bourse.
The report said that the rally during the outgoing month was primarily been led by confidence in the overall investment climate fueled by the ongoing robust economic momentum across the country.
Meanwhile, the government’s efforts to address supply-side issues have managed to tame down inflation, which clocked in at 7.97% during Dec’20 (Nov’20: 8.35%).
The report said that the announcement of plan for circular debt clearance this month lured bulls in the power sector. “The said plan involves the first installment (40%) to be paid in February (33% cash, 33% Sukuk and 33% floater PIBs) while the remaining is expected to be paid in 6 months with same structure,” it said.
The Technology sector also witnessed phenomenal gains during the outgoing month on the back of re-rating of the entire sector.
“Other reasons for the optimism during January include the diluting political noise as the PDM protests seem to be a non-existential threat to the stability of the government. Moreover, jubilant activity across cyclical sectors are likely to translate into healthy earnings during the outgoing quarter which has also kept the sentiment upbeat,” it added.