Pakistan’s equity market witnessed a volatile week where the benchmark index closed Friday at 37,131 points, down 0.4 percent from last week.
Average daily volume remained subdued at 122 million shares while average value traded slid 15 percent to US$33 million per day. At the verge of entering an IMF program, economic clarity continues to evade investors: it seems as though the unanticipated reshuffle of the federal cabinet, including removal of the finance minister, at such a crucial stage has had lingering effects on the markets.
During the week, the constant flow of quarterly results remained in the spotlight where the Banking sector in particular stood out with noteworthy results, bringing some sanity to the oversold market. Foreigners, who were net sellers in the previous week, became net buyers of US$9.3 million with a significant portion of the buying witnessed in Commercial Banks and Oil & Gas Exploration Companies.
Over the week, global oil prices surged on supply concerns after Donald Trump announced to revoke all waivers on import of Iranian oil. This announcement coincided with PM Imran Khan’s visit to Iran where President Rohani announced that Iran is ready to meet Pakistan’s oil, gas and electricity demands. Upon returning from Iran, the Prime Minister left for China where he met with CEO of the World Bank and is expected to sign key agreements with the host country.
Other important news flows during the week included (1) signing of a $500 million development projects framework with South Korea, (2) Islamic Development Bank’s agreement to lend US$551 million for oil and LNG imports (3) agreement with the IMF of a single Value Added Tax (VAT) regime, (4) initiation of negotiations between the government and Independent Power Producers (IPPs) over their Power Purchase Agreements and (5) the SBP’s decision to increase LTFF limit from Rs1.5 billion to Rs2.5 billion in an attampt to increase exports.
The forthcoming week could prove to be a critical with the IMF team’s visit. It is pertinent to mention here that Pakistan has been requested to reschedule upcoming debt obligations to China and others if it is to enter an IMF program, said an equity analyst Ali H. Zaidi.