Karachi, September 01, 2022 (PPI-OT): Aug’22 Market Review and Outlook

The KSE-100 index traded up by 5.5%MoM, gaining ~2,200pts during the month, with confidence returning to the market following the IMF’s executive board’s approval of the 7th and 8th tranche to Pakistan – totaling US$1.2bn, reversing the losses from the previous month (Jul’22 KSE-100 down 3.3%MoM). This takes the CYTD return of the index to -5.0%.

Volumes were strong during Aug’22, with daily volume in the market averaging 438.2mn shares during the month, compared to ~223mn shares in the earlier month. Of these, KSE-100 volume averaged 229.47mn shares on a daily basis in Aug’22.

PkR strengthened against the USD during the month by 9.4% with sovereign default fears subsiding. Consequently, the index returned a US$-denominated return of 13.8% during the month.

On a sectoral basis, the best performing sectors in Aug’22 were Automobile Parts Manufacturers/Woolen/Refineries, returning 19.0%/18.3%/14.0%, respectively. As opposed to this, Miscellaneous/Tobacco/Vanaspati were the worst performing sectors during the month, posting a negative return of 22.8%%/13.2%/9.5%, respectively.

With Pakistan’s external situation now appearing manageable, outlook for the market appears positive, however, onset of floods as well as continued inflationary pressures may temper outlook. In the short-term, with IMF in the bag, the market will be looking at; i) further flows from bilateral and multilateral agencies, ii) inflation reading for Aug’22, and iii) result of the on-ground verification of the FATF team, expected to conclude by Sep 2, 2022.