KSE-100 lost 1,277 points in Mar’21

The benchmark equity bourse underwent a dip of 1,277 points / 2.8% during Mar’21 (USD-based return arrived at 0.6% amid PKR appreciation of 3.5% MoM) to close at 44,588 points. Dismal performance of the market was in lieu of political noise following the controversy tainted Senate Elections 2021, whereby despite the ruling party – PTI – emerging victorious, a major setback on a hotly contested Islamabad seat clouded the overall outcome. Alongside this, severity of COVID-19’s third wave (cases / infection averaged at 2,954 / 7.2% against 1,248 / 3.4% last month), rising oil prices and the subsequent risk to external account as well as looming up of the CPI reading, kept the market under pressure. Meanwhile withdrawal of certain corporate tax exemptions (condition for resumption of the IMF’s USD 6bn Extended Fund Facility), further dented sentiments at the index. With that said, FYTD return settled at 29.5% while CY21TD (1QCY21) return compressed to 1.9%.

The political arena spectacularly heated up this month despite PM Khan emerging victorious in the voluntarily trust vote sought from the National Assembly post Senate Elections. Week two of the outgoing month marked the worst week in almost a year (shedding 2,049 points WoW). Although the opposition’s “Long March” plans kept nervousness at the bourse alive, the environment cooled down immediately once postponement was announced due to differences over mass resignations in the joint opposition. Albeit, bulls recovered some lost ground as positive developments came through: the MPC announced status quo in the latest monetary policy with SBP projecting GDP at nearly 3% in FY21 (against over 2% earlier). Moreover, the Pak Rupee strengthened against the USD amid rising foreign flows and expected inflows of USD 500mn from the IMF tranche. The incumbent government also managed to successfully float USD-denominated Eurobonds worth USD 2.5bn in the international capital market towards end of the month.

Major News

Roshan digital account attracts USD 671mn in six months, USD 2.5bn raised in govt’s first foray into international market, World Bank commits USD 1.3bn to Pakistan for 7 projects, USD 499m IMF tranche received, LSM posts 9.1% growth in Jan’21, FDI declines 30% to USD 1.30bn in Jul-Feb’21, Auto financing ‘all-time high’ at PKR 273bn, Feb C/A deficit narrows USD 50mn MoM, CPI during Feb’21 rises to 8.70%, PM removes Hafeez Shaikh, Private sector borrowing up by 43.1% in eight months, and Resumption of Indo-Pak trade now in sight.

Courtesy – AHL

Posted in Article & Features.

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