The just-concluded month of March brought a lot of negatives for the electioneering Pakistan’s stocks market, yet the first day of April, augured well for the country’s equity market that shot up to an all-time high on first day of the week.
Having been moving northward for the last nine months, since May 2012, the country’s stocks market, during March, witnessed contractions on almost all fronts for one reason or another. The month in review saw the benchmark KSE-100-share index sliding by 0.7 percent, -5.78 percent in dollar terms, month-on-month (MoM).
Pakistani equities under performed during last month as compared to the Asian markets by posting, on average, returns of -1.35 percent. On Monday, however, the benchmark 100-share index closed at what the Karachi Stock Exchange (KSE) said was the “highest” (18,272.11) points, gaining 229 points compared to 18,043.31 points of Friday last week.
With trading volumes standing at 171.013 million shares, lower than 204.391 million of last trading session, the value of the total stakes traded increased significantly to Rs 7.281 billion from the previous Rs 4.972 billion.
According to Ashen Mehanti, senior equity analyst and a director at Arif Habib Securities, the record high was because of the investors’ interest in the stocks across the board ahead of the quarter-end earning announcements after the Oil Marketing Companies’ (OMCs) margins increased up to 13 percent on oil products, raising valuations in the OMC sector.
“Strong data on urea and cement sales, speculations ahead of CPI inflation for March expected to be below 7% played a catalyst’s role in bullish sentiments at KSE,” the analyst said.
This, Mehanti said, was amid the investors’ concern for the ever-burgeoning circular debt haunting the energy sector, rising fiscal debt and a lingering uncertainty over the economic impact of the IMF loan’s repayments. On Monday, the market capital was recorded at Rs 4.47 trillion compared to Friday’s Rs 4.44 trillion. Of the total 332 scrips trade, the price of 214 appreciated, 98 depreciated while that of 20 remained unchanged.
A monthly account of the stock performance shows that in March the Pakistani equities mostly remained under pressure with the average trading volumes of the month dipping by 20 percent MoM and 26 percent YoY.
Similarly, the index’s traded value registered a 15 percent decline to stand at Rs 2.8 million. InvestCap analyst Abdul Azeem said the banking sector, the weight of which is 18 percent in the index, was disturbed by the central bank ordering the banks to pay savings rate at the average balance of the month instead of the previously adopted practice of payment at the minimum balance. “The SBP’s notification inculcated negative sentiments for the banking sector therefore pulling down the latter by 6 percent,” he said. The analyst said the oil and gas sector also lost three percent caused by 6 percent monthly fall in the oil prices. “However, such performance by KSE-100 seems less negative considering most of the emerging market indices, 14 out of a total of 22, including the MSCI Emerging Market Index and MSCI Frontier Market Index marked the month, closing in the negative,” said Azeem. On the other hand, the inflow of foreign investment also remained in the red zone with net inflows showing a decline of 11 percent to $ 25.9 million. This translates cumulatively into $ 70 million for CY13TD, marking an upsurge of seven percent quarter-on-quarter.
Pakistan stood 5th on the list of MSCI Index for the Asia Pacific countries. Though behind Taiwan, Philippines, Vietnam and Thailand, the electioneering Pakistan outperformed the equity markets of regional giants like India, China, South Korea and Indonesia.
Further, the equity markets in the terrorism-hit country remained a relatively attractive destination for off-shore equity investors who found Pakistan the fourth best place for their investment equity market after India, Indonesia and Japan.
“Following the low interest rates scenario and clarity on political front, we expect both factors to help create a positive rally,” said the analyst.
The analysts, however, have a long-term positive outlook for the local equity market in the absence of any major change in the state bank’s monetary policy stance due to be unveiled this month.
