• The additional downside to starting the week now brings Pakistan to longer-term levels.
• 60k KSE-100 and 20K KSE-30 are significant levels, and we are now on alert to watch for signs of bottoming and the resumption of upside.
• For the remainder of the week, we will watch for the main indices KSE100, KSE30 and KSEALL to show signs of divergence to signal a tradable low is in place.
• The drawdown for the KSE-100 has now extended beyond -10%, historically the turning point in bull markets.
• One point of concern is that Pakistan is currently on the watch list from FTSE for potential demotion from Secondary Emerging to Frontier market status. Over the last few years, Pakistan has experienced a steady decrease in its index weight within FTSE Russell global benchmarks. This has resulted in the market failing to meet the minimum investable market capitalization exit level threshold required to retain a Secondary Emerging market status.
• Based on data as of the close on 30 June 2023, the total investable market capitalization of Pakistan in the FTSE Emerging All Cap index was USD 3.01bn, while the minimum investable market capitalization exit level threshold required to retain Secondary Emerging market status, is USD 3.49bn, as per the Nov FMR Pakistan’s investable market cap stood at USD 3.788bn. We are currently a touch below the Nov 30 closing.
• To mitigate the FTSE downgrade risk, Pakistan needs to rally into year-end.

Courtesy – Arif Habib Ltd Sales