The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index closed at its all-time high of 36,235 points, up 260 points from the last day, after experiencing a bullish trend on the first trading session of the week on Monday.
The market rose 0.72 per cent with the KSE-100 Index hovering at an intraday high of 36,300.52 points, 171 points below its all-time intraday high of 36,471 points on August 6, 2015.
The KSE-100 Index, which measures the performance of the hundred most liquid stocks, recorded an increase of 3.6 per cent in the last week. The performance of the stock exchange did not disappoint, and remained bullish for the day on Monday.
“Market rallied primarily on prospects of Pakistan being upgraded to Emerging Market status from Frontier Market by MSCI [an international firm that provides research-driven insights and tools for investment decisions],” said Qasim Anwer, an analyst at AKD Securities Limited.
An emerging market is one which is in the process of establishing a more mature marketplace. This sector of the global market contains greater risk along with the potential for greater rewards.
Pakistan remained in the MSCI Index of Emerging Markets for 13 years from 1994 to 2007, but was removed from it in December 2008. After Pakistan’s shift from standalone to frontier market index in May 2009, the stock exchange showed impressive growth in terms of improved liquidity and enhanced capitalisation.
While Pakistan’s prospective upgrade to emerging market by the MSCI remains a major factor for the rallied-trend, Zeeshan Afzal, the head of research at Taurus Securities Limited, also attributes the bullish trend to the waning effects of the Panama Leaks.
Giving an outlook on this, he said that the market was seeing a rallied-trend before the Panama Leaks came out; however, it slowed down as the investors were fearful on account of the names of government officials appearing in the leaks.
According to a research by AKD Securities Limited, the Fauji Meat Limited, International Steels Limited, Packages Limited, Mari Petroleum Company Limited, Oil and Gas Development Company Limited, Northwestern Mutual Life Insurance, Pakistan Oilfields Limited, Sui northern Gas Pipelines Limited and Habib Bank Limited are the companies contributing to the rally in trend.
However, the highest average volume was clocked in at 16.6 million shares by The Resource Group (TRG) for the last 21 days, followed by 13.3 million shares of the SNGPL and 9.7 million shares of the BYCO.
The overall trend of 2015 was slow but a surge has been observed in the last four months.
“The market is expected to rise further as the anticipation for Pakistan’s upgrade to emerging markets by MSCI grows,” said Afzal. “The valuation discount may go beyond Pakistan’s historical average. It is expected to increase from 9.5x to 11x or to even 12x after the announcement of the much-anticipated upgrade till the implementation of the upgrade within a year.”
