Pakistan stock performed negatively – 2.5% performance during the Nov

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· Drawing curtains to MSCI EM, KSE-100 closed Nov’21 at 45,072.4pts, denoting a –ve 2.5% performance during the month while marking the highest volatility CYTD. Avg. Volume for the month stood at 316.1mn shares compared to 279.7mn shares in Oct’21, with activity primarily tilted towards mainboards (KSE/KSE-ALL volume at 29.1% vs 26.7% FYTD).

· Factors at play were, i) Central Bank mounting on aggressive monetary tightening (150bps hike in policy rates and 1% increase in cash reserve requirements of Commercial Banks), ii) Pakistan reaching a staff-level agreement with the IMF, iii) authorities successfully deploying diplomatic relations with Saudi Arabia to gain US$3bn in deposits and US$1.2bn in oil deferral facility, and iv) MSCI related rebalancing.

· Foreigners’ net sell stood at US$141.3mn in Nov’21, mainly related to MSCI-related rebalancing. Fresh inflows were witnessed in Commercial Banks (though US$64.6mn lower than outflow) and Techs (net buy: US$3.86mn).

· With ease-off in global commodities improving Pakistan’s macro outlook, IMF-related uncertainty largely behind and MSCI-related rebalancing complete, the market is poised for a solid year-end performance in our view. That said, Nov’21 inflation at 11.53%YoY with signs of higher inflationary readings in coming months would keep investors on toes regarding the pace of monetary adjustments in our view.

Courtesy – AKD Research

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