Karachi, June 03, 2022 (PPI-OT): Market loses 4% WoW amid economic concerns

Pakistan equities closed the week on a negative note at 41,315, reporting a decline of 3.6% WoW. Moody’s downgrade for Pakistan from ‘Stable’ to ‘Negative’ fueled bearish sentiments of the already hesitant investors on the last trading session of the week. However, the govt finally took tough measures this week for the restoration of IMF programme, reflecting from the decision of hiking POL prices through withdrawal of PDC and an increase in electricity tariff. The Auto sector was among key underperformers this week over bleak outlook of the sector. Other underperformers included Cement and Glass sectors due to -ve growth expected in FY23 as second round impact of inflation would kick in.

On the news front, cut off yields showed an increase of 55-75bp as compared to the previous cut-off during the T-Bill auction held this week. Moreover, govt also raised rates of some saving schemes in the range of 30-150bps. On the external front, SBP reserves depicted a slight decline, clocking in at US$9.7bn, while Trade deficit for May-22 further widened by 11.5% YoY. Moreover, Finance Minister informed that terms have been agreed regarding the rollover of US$2.3bn deposits from China, which would support our fx reserves.