Market Daily: Foreign investors slash Pakistan equities by 6pc in May

LAHORE: Provoked by domestic political crisis and global equities sell-off, Pakistan stocks nosedived ~6 per cent in May 2018, that is the highest loss in the last 7 months. Global sell-off in equities was witnessed amid a rise in bond yields in America, the political crisis in Italy, and strengthening of US dollar against major currencies especially Euro. Resultantly, Pakistan’s foreign portfolio investment witnessed 9-month high outflow of $73 million during May 2018, while YTD outflow remains at $59 million.

However, in Thursday’s session international market recovered as Italy political turmoil receded after the news of two anti-establishment party’s efforts to form a coalition government and successful auctioning of five and ten years bonds in Italy. Ensuing this, Pakistan equities turned green and posted return of 0.7 per cent or 300 points, closing at 42,847 points.

To recall, in recent semi-annual index review of MSCI, from small-cap index PAEL, NRL and IGIHL were deleted. This revision will take effect from July 1, 2018.

Hub Power Company (HUBC) notified Pakistan Stock Exchange (PSX) of its extraordinary meeting that will be held on Friday, Jun 22, 2018, at Karachi. Agenda of the EOGM would be to pass a resolution related to Thar Energy Limited (TEL), investment in SECMC, and increase authorised share capital.

Faysal Bank (FABL) notified exchange regarding its intention to acquire up to 19.99 per cent voting shares of its associate company from Razi-ur-Rehman Khan at Rs30 per share.

Moreover, Avenceon (AVN) notified exchange about receipt of new projects from AA Turki company, Polaris Trading and Shell Pakistan amounting to Rs54 million, Rs30 million and Rs17 million respectively.

In its last bid to appease sugar barons and industrialists, the government approved a relief package of Rs90 billion for export-oriented industries and permanently lifted the restriction on sugar exports. Headed by the prime minister, the ECC extended the PM’s Export Package for three more years that would cost the national exchequer Rs40 billion annually.

For many in Pakistan, it is a question of when rather than if the nation will go to the International Monetary Fund for financial support to pay its soaring foreign debt as reserves dwindle. External debt and liabilities have increased 76 per cent to Rs10.6 trillion ($92 billion) since June 2013, taking the ratio up to 31 per cent of gross domestic product, the highest in almost six years as per news reports.

Technically speaking, the KSE 100 index staged a rally but did not succeed in closing above 20EMA (42,986) despite all the excitement. Next major resistance is previous week’s high (43,060). Immediate support is 41,872 (intraweek low) and 41,458 (intraday low from May 18).

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