This week’s economic indicators present a mixed bag for Pakistan’s financial landscape, with modest gains in the stock market, slight movements in currency exchange rates, and fluctuations in commodity prices. Key data from the State Bank of Pakistan and other market sources highlight the ongoing challenges and opportunities within the economy.
CURRENCY MARKET PERFORMANCE
PKR Stability:
The Pakistani Rupee (PKR) showed minimal movement in the interbank market, closing at 278.55 on August 9, 2024, a slight increase from 278.50 on August 2, 2024. The open market rates mirrored this stability with the USD remaining steady at 280.40, reflecting resilience despite external economic pressures.
International Currencies:
In the international forex market, the Euro (EUR) saw a modest increase from 1.0911 to 1.0916, while the British Pound (GBP) slightly depreciated, dropping from 1.2804 to 1.2759. The Japanese Yen (JPY) and Chinese Yuan (CNY) remained relatively stable, showing minimal fluctuations.
STOCK MARKET AND TRADING VOLUME
KSE100 Index Gains:
The Karachi Stock Exchange 100 Index (KSE100) experienced a notable rise, closing at 78,569.59 on August 9, 2024, up from 78,225.98 a week earlier. This upward trend is supported by an increase in average daily trading volume, which surged to 492,623,350 shares, a significant jump from the previous week’s 357,848,044 shares.
COMMODITY PRICE MOVEMENTS
Gold and Silver Prices:
The gold market in Karachi saw a slight decline, with the price of 10 grams of gold dropping to PKR 219,907 from PKR 220,593. Similarly, international gold prices decreased to USD 2,431.10 per ounce from USD 2,441.87. Silver also followed this downward trend, falling from USD 28.552 to USD 27.46 per ounce.
INTEREST RATES AND TREASURY AUCTIONS
KIBOR and PIB Rates:
The Karachi Interbank Offered Rate (KIBOR) for 6 months decreased to 18.83% from 19.37%. Meanwhile, the 10-year Pakistan Investment Bond (PIB) yield slightly declined to 14.04% from 14.09%, reflecting cautious investor sentiment.
T-Bill Auction:
In the recent T-Bill auction on August 7, 2024, cutoff yields fell across all tenors, with the 3-month yield dropping to 18.9748% from 19.4899%, indicating potential easing of monetary policy pressures.
ECONOMIC INDICATORS AND RESERVES
Foreign Exchange Reserves:
Pakistan’s foreign exchange reserves showed a marginal increase, with total reserves rising to USD 14,471.90 million from USD 14,391.70 million. The State Bank of Pakistan’s reserves also saw a slight uptick, reaching USD 9,153.30 million.
Inflation and SPI:
The Sensitive Price Indicator (SPI) for the combined group increased to 322.54, marking a 0.30% week-on-week change, with year-on-year inflation easing to 17.96% from 18.41%. The Consumer Price Index (CPI) also recorded a 2.10% month-on-month increase in July, up from a 0.46% increase in June.
TRADE AND INVESTMENT
Trade Balance and Remittances:
Pakistan’s trade balance improved slightly, with the deficit narrowing to USD 1,948 million in July from USD 2,406 million in June. However, exports dropped to USD 2,308 million from USD 2,558 million, while imports decreased to USD 4,256 million. Home remittances also fell to USD 2,995.15 million in July from USD 3,158.14 million in June.
PSX
The Pakistan stock market extended its rally on the back of blockbuster earnings from index heavyweight Mari Petroleum. The KSE-100 Index surged by 695.36 points or 0.89%, closing the session at 78,569.58. This positive momentum was driven by investor optimism following Mari Petroleum’s strong financial performance and dividend announcement.
MARKET PERFORMANCE HIGHLIGHTS
Intraday Movement:
The KSE-100 Index remained in positive territory throughout the day, reaching an intraday high of 78,823.13 (+948.91 points) and a low of 78,051.08 (+176.86 points). The total trading volume for the KSE-100 Index was recorded at 139.15 million shares.
Company-Wise Performance:
Out of the 100 index companies, 63 closed in the green, 32 in the red, and 5 remained unchanged. Top gainers included YOUW (+17.30%), BNWM (+10.01%), MARI (+10.00%), POML (+8.78%), and UNITY (+6.79%). On the downside, KAPCO (-3.81%), KEL (-3.48%), FHAM (-2.95%), FFBL (-2.30%), and OGDC (-1.97%) were the top losers.
MARI PETROLEUM’S EARNINGS REPORT
Mari Petroleum reported an Earnings Per Share (EPS) of PKR 579.36, reflecting a 38% year-on-year growth. The company announced a dividend of PKR 232 per share for the fiscal year ending June 2024. In addition, Mari Petroleum revealed plans to issue eight bonus shares for every one held, further boosting investor confidence.
According to Arif Habib Limited (AHL), “The results were above expectations and pushed the price to new all-time highs.” Mari Petroleum’s stock witnessed its best two-day rally since at least 2001, significantly contributing to the overall market gains.
SECTOR AND INDEX CONTRIBUTORS
Sectoral Support:
The KSE-100 Index was bolstered by key sectors, including Commercial Banks (+360.83 points), Oil & Gas Exploration Companies (+194.48 points), Technology & Communication (+80.65 points), Oil & Gas Marketing Companies (+45.39 points), and Cement (+40.62 points).
Index Point Contributions:
Mari Petroleum led the index contributors with a 243.02-point gain, followed by UBL (+127.77 points), MEBL (+50.22 points), MCB (+45.46 points), and SYS (+41.82 points). Conversely, OGDC (-56.11 points), FFC (-51.28 points), EFERT (-25.85 points), KAPCO (-17.88 points), and FFBL (-15.12 points) were among the top detractors.
BROADER MARKET AND TRADING ACTIVITY
All-Share Index:
The broader All-Share Index closed at 50,430.73, gaining 460.75 points or 0.92%. The total market volume was 420.41 million shares, down from the previous session’s 493.09 million shares, while the traded value decreased to PKR 20.72 billion, reflecting a PKR 5.13 billion drop.
Top Ten by Volume:
The most actively traded stocks included KOSM, which rose by 14.09% with a volume of 64.78 million shares, and YOUW, which gained 17.30% with 24.86 million shares traded.
YEAR-TO-DATE PERFORMANCE
The KSE-100 Index has gained 125 points or 0.16% during the fiscal year, while the ongoing calendar year has witnessed a cumulative increase of 16,119 points, equivalent to a 25.81% rise, reflecting strong market performance driven by key corporate earnings and investor sentiment.
PKR APPRECIATES SLIGHTLY AGAINST USD AS INTERBANK AND OPEN MARKET SHOW MIXED RESULTS
The Pakistani rupee (PKR) saw a modest appreciation against the US dollar during Friday’s interbank session, gaining 13.54 paisa or 0.05% to close at PKR 278.55 per USD. This movement reflects the ongoing volatility in the currency market, as investors and traders respond to domestic and global economic conditions.
DAILY AND WEEKLY CURRENCY PERFORMANCE
Interbank Performance: Throughout the trading day, the PKR fluctuated within a tight range, hitting an intraday high (bid) of 278.95 and a low (ask) of 278.75. By the end of the session, the rupee settled at PKR 278.55, marking a slight improvement from the previous close of 278.69.
Open Market Rates: In the open market, exchange companies quoted the dollar at PKR 279.24 for buying and PKR 280.40 for selling, indicating a slightly higher spread compared to the interbank rate.
Weekly Trend: On a weekly basis, the PKR registered a minimal loss of 5 paisa against the US dollar, highlighting the currency’s relative stability over the past week.
PKR PERFORMANCE AGAINST MAJOR CURRENCIES
Euro: The PKR appreciated by 63.55 paisa against the Euro, closing at PKR 304.22 compared to the previous value of PKR 304.85.
British Pound: The British Pound became more expensive, with the PKR depreciating by 1.56 rupees, closing at PKR 355.50 compared to PKR 353.94 from the previous day.
Swiss Franc: The PKR strengthened against the Swiss Franc, gaining 2.78 rupees to close at PKR 321.71 from the previous session’s PKR 324.49.
Japanese Yen: The PKR also saw a modest gain of 1.81 paisa against the Japanese Yen, closing at PKR 1.8923 compared to PKR 1.9104 a day earlier.
Chinese Yuan: Conversely, the PKR lost 9.05 paisa against the Chinese Yuan, closing at PKR 38.83 compared to PKR 38.92 in the previous session.
Saudi Riyal and UAE Dirham: The Saudi Riyal and the UAE Dirham also saw marginal changes, with the PKR closing at 74.22 and 75.87 respectively, reflecting a slight depreciation.
YEAR-TO-DATE AND FINANCIAL YEAR PERFORMANCE
During the current financial year, the PKR has depreciated by 20.88 paisa or 0.07% against the US dollar. However, on a calendar year basis, the PKR has appreciated by 3.31 rupees or 1.19%, indicating a mixed performance influenced by various economic factors.
MONEY MARKET UPDATE
In the money market, the benchmark 6-Month Karachi Interbank Bid and Offer Rates (KIBOR) dropped by 8 basis points, with the bid rate at 18.58% and the offer rate at 18.83%.
State Bank of Pakistan (SBP) OMO: The State Bank of Pakistan conducted a reverse repo and Shariah-compliant Modarabah-based Open Market Operation (OMO) today, injecting a total of PKR 3.17 trillion into the market. Out of this, PKR 3.08 trillion was injected through reverse repo OMO, while the remaining PKR 90 billion was injected through Shariah-compliant Modarabah-based OMO, aiming to manage liquidity and stabilize short-term interest rates
WEEKLY MARKET REVIEW: KSE-100 INDEX RECOVERS AS STRONG EARNINGS OFFSET GLOBAL CONCERNS
Pakistan’s stock market started the week under pressure, mirroring global markets’ fears of a US economic slowdown. However, robust corporate earnings helped the KSE-100 Index recover and close the week in the green.
WEEKLY PERFORMANCE OVERVIEW
KSE-100 Index Movement: The benchmark KSE-100 Index closed the week at 78,570, marking a gain of 344 points or 0.4% week-over-week (WoW) in both PKR and USD terms. The index experienced significant volatility, trading within a range of 1,880 points, with a high of 78,823 (+597) and a low of 76,943 (-1,283) points.
Trading Volume and Value: The Pakistan Stock Exchange (PSX) saw a noticeable increase in trading activity, with the average traded volume rising to 492.62 million shares, up by 37.7% WoW. The traded value also saw an increase of 21.3% WoW, totaling Rs20.63 billion.
Market Capitalization: PSX’s market capitalization grew by $406.16 million or 1.1%, reaching $37.65 billion. In PKR terms, market capitalization stood at Rs10.49 trillion.
GOVERNMENT AUCTIONS AND MONETARY POLICY SIGNALS
During the week, the government conducted two key auctions, raising Rs355 billion through Market Treasury Bills (MTBs) at lower yields and Rs328 billion through Pakistan Investment Bonds – Fixed Linked (PIB-PFL). The State Bank of Pakistan (SBP) reduced the cut-off yields for T-Bills by 50 to 54 basis points across all tenors, reinforcing market expectations of further interest rate cuts.
SECTORAL PERFORMANCE AND TOP INDEX MOVERS
Top Contributing Sectors: The rally was led by the Oil & Gas Exploration Companies sector, which added 614 points to the index. Mari Petroleum, a heavyweight in the sector, delivered blockbuster earnings that surpassed market expectations, fueling a broader rally within the sector. Other contributing sectors included Technology & Communication (+84pts), Oil & Gas Marketing Companies (+51pts), Investment Banks/Investment Companies/Securities Companies (+31pts), and Food & Personal Care Products (+22pts).
Top Performing Stocks: The best-performing stocks during the week were Mari Petroleum (MARI), contributing 447 points to the index, OGDC (+109pts), UBL (+97pts), MEBL (+77pts), and SYS (+62pts). Mari’s stock surged by 20.1% WoW, its largest weekly gain since December 2023.
Negative Contributors: Conversely, sectors that dragged the index down included Fertilizer (-192pts), Power Generation & Distribution (-103pts), Refinery (-33pts), Cement (-32pts), and Chemical (-23pts). Notably, stocks like FFC, BAHL, HUBC, AKBL, and COLG collectively shaved off 552 points from the index.
FOREIGN AND LOCAL INVESTOR ACTIVITY (FIPI/LIPI)
Foreign Investors: Foreign investors were net buyers during the week, purchasing $1.41 million worth of equities.
Local Investors: On the local front, individual investors were the dominant buyers, with a net investment of $3.35 million. They primarily focused on the Oil and Gas Exploration Companies sector, investing $2.60 million, while selling off $1.77 million worth of equities in the Fertilizer sector.
Mutual Funds: Mutual Funds were the leading sellers, with a net sale of $5.57 million. They significantly offloaded their positions in Oil and Gas Exploration Companies ($2.92m), while making minor acquisitions in Power Generation and Distribution worth $0.48 million.
