Karachi, May 12, 2023 (PPI-OT): Political turmoil causes KSE100 to lose 2% WoW

In a turnabout from previous trend, market closed negative this week, losing a total of 754 points over rising political temperature and delay in completion of IMF's ninth review. Investors chose to stay on the sidelines as a result of the former premier's arrest and the subsequent nation-wide violent protests. Sectorwise, the E and P (down 6% WoW) and Tech (down 3.5% WoW) sectors stood out as key under performers. On the economic front, Budget deficit data showed contraction to 1.7% of GDP during 3QFY23. In absolute terms the deficit expanded 17% YoY for 3QFY23.

Deterioration was broadly contributed by 52% YoY increase in mark-up expenses. The 3Q primary balance turned negative for the first time in FY23. 9M's primary balance added up to Rs503bn, falling short of the goal set at Rs897bn. Likewise, remmitances' data for 10MFY23 showed a 13% YoY decline. Pak rupee faced steep devaluation on Wednesday and Thursday and lost 5% (Rs14) taking PKR/USD to all time low of 298.93. Currency then recovered to settle at a PKR/USD of 285.08 on Friday over expectations that political climate would improve in the wake of the Supreme Court's ruling declaring Imran Khan's detention to be illegal. SBP reserves remained largely stable declining by US$74mn to US$4.4bn translating into an import cover of around 1 month.