Karachi: The KSE-100 index recorded a 3.3% month-over-month return in September 2024, underpinned by the approval of the IMF’s Extended Fund Facility and ongoing monetary easing. This favorable economic backdrop has heightened investor confidence in Pakistani equities despite significant foreign sell-offs.
According to AKD Securities Limited, the optimism stemming from the recent IMF agreement coupled with continued monetary easing has kept investor interest robust, contributing to the KSE-100’s performance in both local and US dollar terms. However, the market faced liquidity challenges, with average trading volumes and traded values both experiencing declines from the previous month.
Foreign investor dynamics shifted as they turned net sellers for the first time since January 2024, influenced by the FTSE’s reclassification of Pakistan to Frontier market status. This reclassification followed the country’s failure to meet the required securities count, leading to a net sell-off of $54.8 million in equities by foreign investors. The technology sector was the exception, attracting $3.7 million in foreign investments.
On the domestic front, mutual funds, individuals, and banks absorbed the foreign sell-off, capitalizing on lower valuations. Mutual funds notably increased their holdings by $42.3 million, while individuals and banks also showed strong buying activity. Conversely, the insurance sector, along with brokers and companies, registered net selling.
Sector-wise, fertilizers and pharmaceuticals led the performance charts in September, with monthly gains of 11.4% and 10.3%, respectively. These sectors benefited from favorable conditions such as lucrative dividend yields and deregulation impacts. On the other hand, the power, engineering, and technology sectors faced downturns.
Looking ahead, the investment climate is expected to remain positive with continued macroeconomic stability and supportive external factors, including ongoing assistance from international partners and friendly nations under the IMF program. This stability is anticipated to attract more foreign investment into the Pakistani equity market, with a focus on sectors poised to benefit from monetary easing and structural reforms.