Country’s largest firms repurchase shares as default fears mount

Companies in Pakistan are seeking to repurchase their shares as valuations plummet to their lowest level in at least a decade due to a bid to secure an International Monetary Fund (IMF) bailout programme, according to Bloomberg.

Lucky Cement and Habib Bank, two of Pakistan’s largest conglomerates, have both revealed their plans to buy back shares, while at least five other companies are expected to do the same.

The KSE-100 Index has reportedly fallen to its lowest price-to-earnings ratio since 2008. Pakistan is in need of IMF support to prevent defaulting on its debts, with non-essential import bans resulting in production stoppages across multiple industries.

Zubair Ghulam Hussain, CEO at Insight Securities Pvt, stated that this is the biggest buyback wave in Pakistan’s history and is anticipated to continue. Lucky Cement intends to repurchase up to 7.6% of its shares for up to $36 million, while Habib Bank’s largest shareholder plans to spend 3.5 billion rupees to regain its stock. Shares of both companies increased by 7.5%, decreasing their 12-month losses to 24% and 28%, respectively.

Other companies that have also revealed buyback plans are Bank Alfalah, Maple Leaf Cement Factory, and NetSol Technologies.

In March, Moody’s Investors Service downgraded Pakistan to its lowest rating due to growing concerns about the nation’s ability to secure financing and avoid defaulting.

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