PSX performance in Feb 21

The benchmark equity bourse remained range bound in the outgoing month, posting a decline of 1.1% / 521 points (USD-based return arrived at -0.1%) to close at 45,865 points. Although Pakistan emerged as the 2nd best performing market in the region in Jan’21, market performance could not display the same riveting momentum and remained dull during Feb’21 amid nervousness over FATF’s plenary meeting and profit taking. With that said, FYTD return continues to impress at 33.2% while CY21TD return compressed to 4.8%.

During mid-month, Pakistan and the International Monetary Fund (IMF) reached staff level agreement on the previously suspended USD 6bn Extended Fund Facility (EFF). Albeit, this could not translate into a rally as market participants cautiously awaited FATF’s plenary meeting (scheduled 22nd to 25th Feb’21). Although expectations were ripe of finally exiting the Grey List, Pakistan retained its status and has until Jun’21 to meet the remaining 3 of the 27 initial action points.

On the economic front, external account performance remained subdued as expected; Current Account Deficit (CAD) in the month of Jan’21, was down by 55% YoY to USD 229mn. Though robust Remittances by overseas Pakistanis (registering an increase of 19% YoY) to USD 2,274mn during Jan’21, aided the 65% decline MoM in CAD. This, alongside higher than expected inflows in the Roshan digital accounts (RDA) at North of USD 550mn in just five months, allowed the Pak-Rupee to appreciate to its 3-month high against the USD.   

Major News

Will have to address three remaining points till June: FATF keeps Pakistan in grey list, Roshan digital accounts attract more than USD 550mn in five months, Government expects USD 1bn from dollar-denominated Eurobonds next month, Jan CA plunges 65% MoM, Jul-Jan FDI down 27% YoY, LSM output up 8.16% in 1HFY21, car sales jump 44% to 14,543 units in Jan, OGRA allows SNGPL to raise average price of gas, Income tax on debt profit through Roshan Digital Accounts waived, Fiscal deficit recorded at 2.5% of GDP, Revised power tariff: All 47 IPPs sign Master Agreements, and January exports cross USD 2bn mark fourth time in a row.

Courtesy – AHL Research

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