Pakistan stocks battered as IMF tranche holdup bites
Stocks fell drastically on Monday as the ninth review of the International Monetary Fund (IMF) plan stalled, with the delivery of the next tranche vital for Pakistan’s depleted foreign exchange reserves.
The benchmark KSE-100 Shares Index of the Pakistan Stock Exchange (PSX) fell 537.43 points (1.28%) to settle at 41,612 points after reaching an intraday low of 635 points.
According to Topline Securities’ daily market report, the market succumbed to sweeping profit-taking following a somewhat bullish beginning.
“This selling binge can be related to market anxiety over a snag in the IMF’s ninth assessment and the subsequent acceptance of a $1.2 billion loan tranche,” said the brokerage.
According to the research, these concerns, along with unpredictable economic conditions and low foreign reserves, knocked on investor confidence.
System Limited, Lucky Cement, Engro Corp, Millat Tractors, and Cherat Cement Company Limited exerted significant pressure, denting the Index by 194 points.
According to Arif Habib Limited’s market wrap, a bloodbath session was recorded at the PSX.
“The market began in the green, but a lack of investor engagement and redemptions drove the index far into the red,” according to the brokerage.
According to Arif Habib experts, volumes on the mainboard have dried up significantly as a result of political noise in the country, while third-tier firms have continued to dominate the volume board.
According to JS Research, the concern of a further delay in the completion of the IMF’s ninth assessment, as well as a fall in cement shipments, fueled selling pressure.
“In the future, the index may continue to trade under pressure,” JS analysts said. “However, long-term investors might acquire selected equities with excellent fundamentals and large dividend yields.”
Cement (-127.1 points), technology and communication (-9 points), commercial banks (-76.2 points), fertilizer (-50.6 points), and exploration and production were the sectors that suffered the most harm (-42.4 points).
Volumes fell 11.8% from 143.2 million shares to 126.3 million. The average transaction value fell by 36.4% to $14.5 million from $22.8 million.
WorldCall Telecom, Fauji Cement Company Limited, Hascol Petroleum, K-Electric, and DS Industries Limited all contributed considerably to the volume.
In research on current economic issues, Topline Securities stated that Pakistan’s economy was experiencing one of the most difficult periods in its 75-year history.
“The risk of timely foreign debt payments has grown due to a large external funding shortfall, tough global financial markets, disastrous floods, and local political instability,” it stated.
“Falling foreign exchange reserves and an increasing external funding imbalance are concerning.”
The study went on to say that while the current account deficit was shrinking as a result of currency depreciation and other tightening measures, the largest concern was foreign debt service.