Karachi, June 01, 2022 (PPI-OT): Pakistan Strategy: May’22 Market Review and Outlook

May’22 proved to be a tough year for the local equity investors where the index returned -4.8%MoM on closing basis. This was the worst monthly index performance since Sept’21 when the index returned –5.3%MoM on the closing basis. Also, with PkR depreciating by over 6%MoM, the USD adjusted return during the month stands around -11%MoM.

The average daily trading volume shrunk to 252.2mn shares during the month as opposed to 289.5mn during the last month. The lackluster market participation is reflective of rising economic uncertainty as the soaring trade deficit, huge external debt servicing and rapid reserve depletion is making the investors jittery.

The major underperforming sectors during the month were Cements (-13.3%MoM), Engineering and Pharmaceuticals (-7.6%MoM). While the sectors that were able to outperform the benchmark index were Sugar (2.9%MoM) and Leasing companies (3.7%MoM).

Market is eagerly anticipating announcement of IMF agreement which will not only allow country to unlock further inflows and help meet its maturing debt liabilities but will also help instill confidence in the market. The GoP has already made a headway on reviving the deal by partially rolling back subsidies on the consumption of fuel. However, more needs to be done to get IMF on board.