Karachi, August 02, 2021 (PPI-OT): KSE100 Index loses 0.6% during July-2021

Pakistan equities started fiscal year 2022 on a dull note as the benchmark KSE100 posted a second consecutive monthly loss, closing July-2021 at a level of 47,055 (down 301 points from the previous month). However, the market dipped nearly 1,000 points from the month’s high.

The major theme during the month was the rapidly spreading fourth wave of COVID-19, particularly in the larger cities of the country. The alarmingly high positivity rates, particularly in Karachi (reaching as high as 30%), eventually resulted in the announcement of lockdowns in the metropolis by month-end. Persistently negative news about and resultant expectations built around COVID-19 kept investors cautious and volumes depressed during the month. Average daily traded volumes dropped 50% MoM during the month to 460mn shares while average value traded declined by 38% MoM to US$93mn shares.

A fair share of news flows, both positive and negative, circulated the market during the month. For instance, the government was successful in getting the Finance Bill approved and in raising another US$1bn through Eurobonds. Meanwhile the Monetary Policy Committee decided to keep the policy rate unchanged in its latest meeting. Moreover, after all-time high imports during June-2021, the CAD for FY21 stood at US$1.9bn (-0.6% of GDP). Moreover, on the international front, the Financial Action Task Force (FATF) decided to keep Pakistan on the grey list until all targets are met.

Looking ahead, we highlight healthy economic activity as a good sign from a tax-collection perspective. Moreover, the ongoing result reason may bring out some positive surprises from the cyclical and financial sectors. However, COVID-19 concerns and lack of immediate triggers may keep liquidity at bay. Given so the market could remain range-bound in the immediate term.