Pakistan Stock Exchange down 8.34%WoW on coronavirus hype

The benchmark index of Pakistan Stock Exchange (PSX) continued its slide during the week ended on 27th March 2020, closing at 28,110 points, down 8.34%WoW on coronavirus hype. State Bank of Pakistan (SBP) announced a policy rate cut of 150bps taking the cumulative rate cut to 225bps. There was also an announcement of Rs1.2 trillion stimulus packages, but market sentiment remained bearish. To a large extent PSX also remained insulated to the announcement of massive economic stimulus by the US, as opposed to visible cheering by the other stock markets around the globe. Stocks generating the highest volumes during the week included:  KEL, UNITY, BOP, HASCOL and MLCF, while laggards were: HASCOL, PSMC, PSO, ASTL and DGKC.

Major news flow during the week included: 1) announcement of Rs100 billion refunds to export sectors along with deferred payment of principal and interests on bank loans, 2) Rs100 billion for deferred payment of loans for small and medium enterprises (SMEs), agriculture and concessional loans, 3) reduction in the prices of petrol, diesel and kerosene with immediate effect, 4) divestment from government debt instruments by foreign investors reaching some US$1.8 billion, 5) Pak rupee depreciating 4.3% against greenback over the week, 6) ministry requesting OMCs to halt petroleum imports and increase their offtake from local refineries, and 6) GoP considering to approach multilateral lending agencies for additional financial assistance for fighting adverse economic impact of pandemic. Resulting from reduced market timings, average daily trading volumes declined 37.3%WoW to 150 million shares. While the market sentiments in the upcoming week are likely to be dictated by how GoP grapples with rising coronavirus cases in Pakistan, sectors relatively insulated from direct economic impacts may manage to remain afloat. The benchmark index has already shed 33.5% CYTD.

The total liquid foreign exchange reserves held by Pakistan were reported at US$18,105.1 million on 20th March 2020. The break-up was: reserves held by the State Bank of Pakistan (SBP) were US$11,989.2 million and net foreign reserves held by commercial banks were US$6,115.9 million. During the week under review, reserves held by SBP decreased by US$690 million to US$11,989.2 million. This decline can be attributed primarily to government external debt payments amounting to US$391 million and other official payments.

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