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Weekly Review: Given the socioeconomic climate, investors should exercise caution

KARACHI: Given the country’s current socioeconomic circumstances, investors in Pakistani stocks may want to exercise caution.

KARACHI: Given the country’s current socioeconomic circumstances, investors in Pakistani stocks may want to exercise caution.

Given the nation’s current general socioeconomic scenario, investors will continue to be cautious. However, economists predict that the market will remain range-bound in the following week.

The benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) is now trading at a PER of 4.2x (2023), which is lower than the 12.5x average for the Asia Pacific area, and it offers a dividend yield of 9.6% compared to the region’s 2.7%.

The market continued to be uneasy and displayed a mixed pattern in the previous week.

It commenced on a negative note amid concerns over the flood crisis and its overall impact on the economy.

However, the market soon recovered following the approval and subsequent disbursement of USD 1.17bn tranche from the IMF to Pakistan. As a result, Pak Rupee strengthened against the greenback, closing the week at PKR 218.98, up by PKR 1.68|0.8 per cent WoW.

The bullish trend was short-lived as the announcement of inflation number for the month of Aug’22 (a 47-year high), changed the overall sentiment of the market.

In addition, trade numbers released during the week too dampened the overall sentiment as it posted a 29 per cent MoM jump in August 2022. The market closed at 42,309 points, shedding 282 points (down by 0.7 per cent) WoW.

Sector-wise negative contributions came from i) Banks (118 points), ii) E&P (90 points), iii) Automobile Assembler (61 points), iv) Miscellaneous (40 points) and v) Textile Composite (31 points). Whereas, sectors which contributed positively were i) Cement (110 points), and ii) Leather & Tanneries (25 points).

Scrip-wise negative contributors were HBL (73 points), TRG (47 points), PSEL (41 points), ENGRO (39 points) and POL (36 points). Meanwhile, scrip-wise positive contribution came from SYS (76 points), EFERT (48 points), KOHC (32 points), FABL (31 points) and SRVI (25 points).

Foreigners selling continued this week, clocking in at USD 0.74 million compared to a net sell of USD 1.87 million last week. Major selling was witnessed in Commercial Banks (USD 1.8 million) and Power (USD 0.8 million).

On the local front, buying was reported by Banks/DFIs (USD 3.0 million) followed by Individuals (USD 2.4 million). Average volumes clocked in at 211 million shares (down by 15 per cent WoW) while average value traded settled at USD 31 million (down by 15 per cent WoW).

Abdul Qadeer

My Name is Abdul Qadeer. And CEO Pakistanwap ( JamilBaba ) 😊

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