May 03, 2021 (MLN): The KSE-100 index continued to move downhill as it lost around 325 points during the month of April and closed at 44,262.35 i.e., around 0.73% lower as compared to the closing of the previous month.
While reviewing the monthly pattern, it shows that much of the panic was explained by rising COVID 19 cases and political uncertainty. Despite the presence of several positive key triggers, the details of which will be discussed below, investors chose to embrace the negative aspects of the economy in their investment decisions.
Starting off with the good part, the Roshan Digital Account (RDA) launched in September last year, crossed a major milestone and hit the $1 billion mark as overseas Pakistanis continued to show trust in the Central Bank initiative. Sadly, this piece of data failed to sustain the positive reaction among investors for too long.
Pakistan raised Eurobonds worth $2.5 billion in an auction that attracted bids of $5.3bn that suggested there is interest among international investors for the country’s sovereign instruments given the high interest rates at the offer. The country sold $1bn of the five-year instrument at a yield of 6%, another $1bn of the 10-year bond at 7.37% and $500 million of the 30-year at 8.87%.
The month of April also witnessed upbeat macroeconomic data as the Federal Board of Revenue (FBR)’s net collection for the month of April was Rs384 billion, against a required increase of Rs242 billion, representing an increase of 57% over Rs240 billion collected in April 2020 and 159% of the target.
During the month, Fitch Ratings released a report wherein it anticipated that Pakistan’s GDP growth will rebound to 2.3% during the current fiscal year, following a contraction of 0.4% in FY20 amid high-frequency data point to strong momentum for manufacturing and consumption, but a fresh wave of coronavirus cases poses risks.
Despite strong corporate profitability being witnessed as results were announced during the month along with the above pieces of information, investors' confidence remained muddled on the resurgence of COVID-19 cases in Pakistan (double digit positivity rates and +100 daily deaths), pushing the govt. for adopting stricter measures to curb the flow of positive cases and subsequent pressure on medical facilities, Hamza Kamal, Investment Analyst at AKD securities said.
Other key events for the bourse included the delay in payments to IPPs as Finance Minister deferred taking a decision on payments to independent power producers which affected the Oil & Gas Exploring sector. It snatched as much as 245 points. Although, a healthy dividend announced of Rs 60 share was seen from MARI as the dividend cap was removed, a report of Spectrum Securities highlighted.
Going forward, the sector would perform well, as the payments for circular debt could release, furthermore, during the month the petroleum division granted petroleum concession agreements and exploration licenses to OGDC, MARI, and PPL. This would help the companies improve their production if discoveries are made in the new blocks, the report said.
The Oil & Gas Marketing sector was 2nd in the queue which eroded 128 points, the delay in the payment of circular debt and subdued POL products sales remained the major concern for the investors, it added.
The Power Generation and Distribution sector also contributed to the jeer-worthy performance of the stock markets, as it took away 115 points from the KSE-100 index.
To be specific, the scrips of OGDC (-127), MCB (-96), PSO (-90) and SYS (-89) turned out to be the most disappointing ones.
During the month, 41 companies traded in green while 58 landed in the red zone. The All-Share Market Cap declined by nearly USD 1.36 billion to USD 50.30 billion, i.e. 2.64% lower than the previous month. In terms of PKR, the All-Share Market Cap dropped by Rs 173.46 billion to Rs 7.72 trillion, i.e., 2.20% lower as compared to the last month.
Figures released by NCCPL showed that foreign investors sold a net of USD 16.91 million, with foreign corporates doing the maximum selling. On the local front, a significant net purchasing of USD 20.51 million was observed in ‘Other Organization’, followed by individuals that bought securities worth USD 7 million. On the other hand, Companies and Banks/DFIs sold securities worth USD 12.67 million and USD 4.41 million, respectively.
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