Karachi: The KSE-100 index experienced a 5.5% decline in April, driven by geopolitical tensions with India and newly imposed US tariffs. The index dropped to 111,000, as stocks with strong domestic demand, such as UBL, MLCF, MEBL, and LUCK, outperformed the broader market. Conversely, companies like PPL, PSO, and OGDC, affected by weaker earnings and global trade uncertainties, lagged behind.
Trading activity saw a notable increase in April, with shares and US-dollar value traded rising by 42% and 31% month-on-month, respectively. The Ramadan period had previously impacted volumes, though average trading volumes remained below the levels observed from November 2024 to January 2025. Foreign investors continued to be net sellers, bringing the fiscal year net outflow to approximately $252 million.
The United States announced a 29% tariff on imports from Pakistan, temporarily paused for 90 days. This move is part of a broader US strategy to reduce its trade deficit. The tariff pause presents an opportunity for Pakistan's textile industry to gain a competitive edge over countries like China, which faces a much higher tariff of 145%, as well as Bangladesh and Vietnam. Additionally, a 16% decline in Brent oil prices may help mitigate inflationary pressures.
The International Monetary Fund (IMF) is set to discuss the disbursement of $1 billion under a $7 billion Extended Fund Facility and $200-300 million under a $1.3 billion Resilience and Sustainability Facility on May 9, 2025. The IMF has adjusted its forecasts, lowering Pakistan's Consumer Price Index to 5% for FY25 and 7.7% for FY26, with GDP growth projected at 2.6% and 3% for FY25 and FY26, respectively. The current account is expected to remain at -0.1% of GDP, an improvement from previous estimates.
Key macroeconomic indicators in Pakistan, such as CPI inflation, remittances, and the current account surplus, show positive trends. However, the timing of foreign inflows and geopolitical stability are crucial for sustained economic performance. The upcoming fiscal year 2026 budget, expected in early June, may also influence market activity in specific sectors.
Analysts continue to favor stocks benefiting from domestic demand and monetary easing, highlighting sectors such as cements and energy. Companies like DGKC, FFC, EFERT, POL, and MCB are noted for their attractive dividend yields.