The recently concluded month of May is mostly regarded as a dull period as far as activity at the stock market is concerned, viewed the equity market observers. “After showing a remarkable performance since Jan-12 to Apr-12, the market maintained upward trajectory with better volumes,” said the analysts at InvestCap Research.
During the month, they said, looming budget related uncertainties were generally held responsible to make the investors shy from the investment path with conspicuously low volumes.
In the same vein, during the month activities at local bourse turned out to be quite as the index shaded 1.5 percent MoM with market volumes decreasing by a significant 38 percent on average basis as compared to last month’s average volumes. However, the benchmark KSE-100 index still provided a solid 21 percent YTD return (+16 percent YTD in dollar terms) when compared with the December index level.
Even so, better equity performance is expected after the budget announcement where no new taxes are expected to be incorporated going forward.
In regional terms, the month in review saw only two countries in the Asian region, namely Vietnam +3 percent and China 1 percent, posting positive returns.
However, Pakistan’s equities remained above the average Asian regional equities performance of negative 9 percent and posted -1.5 percent during the month.
Even better, though at much smaller scale, Pakistan equities stood amongst the top three equity markets standing in the green zone as far as foreign flows towards equities are concerned (receiving $39 million net inflows during May totaling $77 million YTD, as against Asia Pacific’s total net outflows of $8.5 billion in May this year.
Going forward, the KSE100 behaviour is largely related to the budget announcement.
However, the economic survey of Pakistan revealed a gloomy picture of the country where the government missed most of the key economic targets of FY12.
In the middle of murky economic indicators, the current appreciation in USD against PKR (4.5 percent FYTD) is also a big concern for the economy.
However, budget target for FY13 should set the direction of the equity market going forward.
