The KSE-100 index closed CY20 with a positive return for two consecutive years, posting a PKR-based increase of 7.4% (USD-based 4.1%). The benchmark index closed at 43,755 points. The index closing is a 4-Yr high (Dec’16: 47,807).

Performance of the index during the outgoing year was initially marred by the novel coronavirus, before posting a sharp V-Shaped recovery.

Key highlights of the outgoing year include:

While COVID-19 jolted investment climate, supportive actions by the SBP/GoP helped to allay concerns of investors and translated into a sharp rebound.

Measures for credit and fiscal stimuli were crucial in preventing a liquidity crunch and helpful in stimulating business confidence. The SBP introduced a TERF (Temporary Economic Refinance Facility) to promote investments and economic activity which provided a fixed mark-up facility (initially at 7% and now reduced further to 5%) for 10 years. Moreover, a “SBP Rozgar Scheme” was introduced to prevent workers’ layoff through financing wages for 6 months. To avert a suppression of cash cycles, the SBP introduced a principal deferment facility and loan restructuring schemes as well. The government announced a fiscal stimulus amounting PKR 1.2tn to support households.

Profitability of the KSE-100 index increased by 3.9% YoY during 9MCY20 led by Commercial Banks (+48% YoY) attributable to NIMs expansion following rate cuts leading to immediate downwards re-pricing of liabilities, Fertilizers (+24% YoY) on account of higher Urea/DAP offtake coupled with improvement in margins, and Power Generation & Distribution (+63% YoY) on account of coal power plant addition (HUBC).

Foreign outflow from equities during the year settled at USD 571mn.

(AHL Research)